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Last updated: 6 June 1996

Achieving cost effective personnel services

Please note: This document is for reference purposes only and is no longer considered by the APS Commission to be current. It may contain good practice advice and/or advice on the transitional arrangements between the 1922 and 1999 Public Service Acts.

MAB/MIAC REPORT NO. 18 NOVEMBER 1995

The Management Advisory Board (MAB) is charged under the Public Service Act with advising the Commonwealth Government, through the Prime Minister, on significant issues on the management of the Australian Public Service (APS).

In December 1989, the Board established the Management Improvement Advisory Committee (MIAC) to bring together a number of senior public servants to discuss significant management issues and initiatives in the APS and to develop detailed advice for the Board. The Committee is broadly representative of the Service as a whole and includes representation from the regional offices of departments and agencies.

In examining issues MIAC looks particularly for models of best practice and information about what better managers are achieving. A line department perspective is emphasised.

This paper is one of a series being published from MIAC's reports to the Board. The Board has agreed to publish these reports to provide Commonwealth public servants with contemporary information on key management issues in the Service.

The Board wants managers to share the experience of others so that they may develop their own knowledge and expertise. Public servants should obtain insights to help with managing change in their organisations. This series of papers is designed to promote discussion and to make best practice in the APS accessible to both public servants and the general reader.

A complete list of the papers in this series is provided inside the front cover of this publication. Details of the membership of the Board and the MIAC are inside the back cover.

 

M.S. Keating Chairman Management Advisory Board

R.A. Higgins Chairman Management Improvement Advisory Committee

Foreword

The Australian Public Service (APS) has now experienced more than a decade of continuing reforms. Since the early 1980's community and Government expectations of the Service have changed, with continuing demands for increased effectiveness and improved performance and a sharper focus on value for money in government services.

The pressures for change are continuing. The review of the Public Service Act, enterprise bargaining, and the continuing rationalisation of the APS award structure are all part of the process of improvement.

As part of this process of review, MAB initiated the Achieving Cost Effective Personnel Services project to review the costs and the effectiveness of these services and, to the extent that change is required, to propose strategies for change. This report outlines the progress to date of the project.

The report raises significant concerns about both the costs and the effectiveness of current personnel practices within the APS. At an efficiency level it is clear that there are wide variations in costs within both the APS and the Commonwealth more generally, and between Commonwealth employment and the best examples of private sector practice.

Similarly, the report's findings make it clear that there is room to improve the effectiveness of these services within the APS. Far too much of our current effort is devoted to administrative processing tasks dealing with personnel administration. There is also scope to improve the cost effectiveness of the strategic human resource management functions associated with the development of our staff and strategic planning for the effective use of our people in the delivery of services to the community.

It is equally clear, however, that the search for best practice in people management in the APS is not an easy task. The APS is properly subject to the requirements of due process in all of its functions which are not necessarily applicable in all other sectors.

Nevertheless, MAB considers that the need for fundamental change in personnel/human resource (HR) administration is compelling. The report makes it clear that to achieve more efficient and effective personnel services it is essential to look both at the rules under which the system of personnel management in the APS operates, as well the way in which individual agencies structure and deliver their HR services.

While the report identifies a number of changes which agencies can make now to improve both efficiency and effectiveness, it is also important to understand that we are embarking on a major change process. The identification and achievement of best practice will take some time.

MAB, however, is keen to embark on this change process as quickly as possible.

A strategy has therefore been agreed which seeks co-operative change through the 1995/96 APS Enterprise Agreement (Continuous Improvement in the Australian Public Service Enterprise Agreement: 1995/96), and builds on the findings of this report by seeking to develop and trial alternative approaches to personnel/HR management during 1995/96. Together with the continuing rationalisation and simplification of the APS award structure and the review of the Public Service Act, these trials should point the way towards sustainable changes in personnel/HR rules and administration in the APS.

MAB and MIAC express their appreciation to Dominic Downie and the MIAC Achieving Cost Effective Personnel Services project team (see Attachment J) for developing and presenting a report which has comprehensively addressed the key issues and which points the way forward for personnel administration in the APS.

Report

Background

The Achieving Cost Effective Personnel Services project was commissioned by MAB and commenced in November 1994.

Terms of Reference

MAB's full Terms of Reference for the project are at Attachment A. In summary, they were:

To assist in the equitable, effective and efficient administration of the APS by gathering and analysing information for the Management Advisory Board on:

• service standards in personnel practices and services across the APS;
• the costs of personnel practices and services; and
• whether agencies cost their personnel practices and services and, if they do, how they do this.

'...The project would aim to communicate and share good practice ... [and would] include managerial time in making personnel-related decisions so that there is a recognition of the extent of devolution within agencies and the usefulness of the support systems that are available and used.

Definition of personnel services

In this report, personnel services is defined as encompassing all aspects of the Human Resource Management (HRM) function. Wherever the report refers to personnel rules or entitlements within the HRM environment, it is referring to the administration of those entitlements, not to the associated level of payment.

The report does not seek to differentiate between Senior Executive Service (SES) and non-SES costs and processes.

Methodology

In December 1994 MIAC and MAB agreed to the scope and strategy for this project. In summary this was:

• An analysis of existing data. This showed that certain HR functions tend to be more resource intensive than others, and that more resources are used in delivering HR services in the APS than have been reported in earlier benchmarking studies for the public sector as a whole. The detailed analysis is at Attachment B.
• The collection and analysis of detailed information from a representative subset of agencies. The aim of this element of the project was to provide comprehensive, uncontestable and comparable data on the costs of key personnel/HR services and the major factors affecting their delivery.
  Some 23 APS agencies (covering about 70% of APS staff), two non-APS Government Authorities, and a number of private sector organisations were surveyed. Information was collected on the costs and effectiveness of HR services overall, and a more detailed analysis done on number of key HR functions. The survey was carried out with the assistance of a firm of consultants. The survey report is at Attachment C.
• A program of structured consultation with all APS agencies. All APS agencies were invited to participate in focus groups at a number of levels to develop a comprehensive qualitative picture of the key issues. The focus group outcomes are summarised at Attachment D
  The scope of the project was later expanded to include a review of the level of checking of personnel transactions and a high level review of process design for some personnel functions , an (Attachment E)analysis of the time that line managers spend on HR functions (Attachment F), and a review of international developments in the personnel/HR area (Attachment G).

Best Practice for the APS

There are frequent references in this report to Best Practice. These references are to the performance of one of the private sector organisations surveyed which, on the basis of a range of criteria, was judged to have effective, efficient and fair HR practices which are an integral part of its overall success. This organisation was not the cheapest in terms of resources devoted to HR.

Where the report refers to better practice it is drawing information from a number of sources, which may include the Best Practice organisation.

The purpose of identifying Best Practice is to provide a reference point against which the APS can review its performance. This is not to suggest that the APS should attempt to simply adopt private sector HR Best Practice, but the practices and differences in outcomes of leading organisations do provide comparative approaches which could be creatively adapted by APS organisations to significantly improve performance.

There is a need to acknowledge that to the extent that APS costs are higher than those of Best Practice, this may be partly attributable to the need for due process in public administration, and the systems that have evolved over time to give effect to this requirement. This emphasis on due process is aimed at ensuring that employees are treated consistently and equitably, and that no individual receives an entitlement in circumstances not seen to justify it. These considerations have often been pursued without regard to either the administrative costs involved or the principles of risk management.

The various rules and processes are the result of a history of some 80 years of personnel administration in the APS and a culture which has developed over a long period of time. Much of the existing administrative framework reflects an environment and a time in which APS staff were managed centrally, with individual agencies having relatively limited discretion in how they managed their people and other structures.

In recent years, the community and the Government have changed their expectations of public sector practice. The reasons for change include:

• Demands for better value for money in government services;
• Pressures for greater effectiveness and responsiveness, improved performance, competitiveness and greater efficiency;
• Changes in technology which allow different ways of delivering services; and
• The increasing devolution of responsibility for various functions from central agencies, and within agencies to line areas.

These changing requirements and the need for continuing improvement in management practices in the APS were identified in the June 1993 MAB/MIAC publication Building a Better Public Service.

The agencies covered in the survey vary in size from around 130 staff to over 20,000, centralised or in a variety of locations, and with different systems and staffing profiles. The particular circumstances of all agencies differ, and the cost of HR service delivery between APS organisations varies by as much as 176%. Small agencies in particular face unique problems in personnel administration (this is covered in more detail in the body of the report). However, the analysis on which this report is based demonstrates convincingly that there is significant overall capacity for APS organisations to improve their performance.

This report is part of an ongoing process of change in personnel administration which began in the 1980's. It builds on the APS Human Resource Management Framework, and identifies clearly where further improvements in human resource management can be made.

The APS human resource management framework

In 1992 the Public Service Commission published an overall framework for human resource management in the APS, to:

• Emphasise the importance of effective human resource management, and effective individual performance, in the setting and achievement of corporate goals;
• Provide the strategic framework of values and principles which underlie Commonwealth public administration, and explain how they relate to the various elements of human resource management;
• Demonstrate the linkages between the different and often apparently discrete elements of human resource management and the ways in which they can be utilised by managers for effective performance management; and
• Describe the ways in which the Public Service Commission and other central agencies can advise and assist in the effective implementation of human resource management.

The Framework brings together the various elements of human resource management and their relationship with each other, and provides a rationale for the existence of these elements.

The challenge now is to identify and achieve the highest possible level of performance. The questions which need to be addressed are:

• Do the costs of managing our people need to be as high as they are?
• Have the processes which have been put in place lost sight of the original objectives which they sought to serve?
• Are we too pre-occupied with the routine elements of human resource management, and not focussing enough on the more strategic elements of how to make the most effective use of people employed in the APS?

Performance measurement

This report refers to a variety of performance measures, collected as key elements of the survey, which have allowed conclusions to be drawn about the relative costs and effectiveness of HR services in those agencies surveyed.

Costing data

Participating agencies were asked to capture all relevant costs associated with the delivery of HR services in their organisation, including:

• Direct salary costs, including temporary staff costs;
• The cost of technology (ie amortised hardware, software licensing costs and systems maintenance costs);
• The cost of facilities (ie rent);
• Other costs (ie printing, stationery, telephones, travel and accommodation); and
• Outsourcing costs (ie the cost of contractors, consultants and scribes).

NOTE: In collecting this information, agencies were carefully instructed on the basis for collection and costing of this information. Labour on-costs and administrative expense overheads are normally included in APS costings according to a standard costing formula developed by the Department of Finance (DoF). However, this formula is not necessarily applicable to other Government Authorities or the private sector.

To allow total costs to be captured consistently for all of the agencies surveyed and enable direct comparisons to be made with external organisations, the standard DoF on-cost rate for superannuation and other salary on-costs has been applied to full-time salary costs, but certain administrative overheads have been excluded. The costs contained in this report cannot therefore be used for assessing the costs or prices of outsourced HR services.

The accuracy of the data has not been independently audited, but where potential or real discrepancies emerged, participating organisations were contacted to ensure the correctness of the data.

MAB is therefore confident that the information supplied by these organisations is sufficiently valid, at a total respondent level, to support the project's key findings.

Performance measures

The project's findings and conclusions are based on a number of key indicators used to measure performance across all participating agencies, including Best Practice.

Proper performance measurement is fundamental to understanding organisational performance in any area. One of the key findings of this project is that, historically, there is limited use of performance measurement at either the macro (organisational) or micro (in relation to specific functions) levels for HR services.

Those performance indicators which have been used have in general been used to monitor processes, rather than overall effectiveness or efficiency. Similarly, there is evidence in some organisations of a culture of excessive checking, based on requirements which have now changed, or processes which are not consistent with effective risk management.

Attachment I contains a list of the key indicators, and associated definitions, used to measure organisational performance as part of the survey.

MAB strongly encourages agencies to review both the efficiency and effectiveness of their HR services. This is not to suggest that agencies should necessarily be using all of the indicators shown, but they should consider which indicators best suit their needs so they can gain a better understanding, in the future, of their performance.

Summary of key findings and conclusions

MAB believes there is a need for fundamental change in the way personnel services are designed and delivered. It is the characteristics of the system as a whole which are driving costs and inhibiting effectiveness.

While the main conclusions are that current services in many areas are inefficient when compared with Best Practice, these inefficiencies are driven by both the rules and the administrative systems within which HR staff operate, and don't relate to the diligence and effort which staff bring to their role.

The key findings and conclusions are as follows:

• The direct cost of delivering HR services in the APS agencies surveyed varied by as much as 176% and is, on average, two and a half times that of Best Practice;
• A significant proportion of HR resources (almost 60%) is invested in administrative and processing tasks rather than in more strategic HR activities. This is virtually the opposite of Best Practice, and contrary to the priorities set for the APS in Building a Better Public Service;
• The key cost drivers are:
  • Devolution hasn't delivered improved efficiency and effectiveness in the APS because, generally, activity and not authority has been devolved to line managers; authority has been largely retained by HR staff regardless of whether they are local or in central areas;
  • The model of HR service delivery based on the philosophy of locating processing and advisory functions with the organisational units they serve has led to duplication of effort and resources and has spread expertise too thinly; and
  • The complexity of personnel rules, the way they're applied, and the volume of processing work generated by them, are significant causes of the high costs of personnel services in the APS;
• HR planning processes aren't linked to other corporate planning processes. Such linkages are a central feature of Best Practice. There needs to be a shift in emphasis from interpreting conditions and processing entitlements to supporting managers in achieving corporate objectives;
• There is limited use of process measurement and review as a means of promoting efficiency and effectiveness;
• The APS invests considerable resources in administering competitive selection processes. However, there are a number of significant issues regarding both the efficiency and effectiveness of the current arrangements;
• There is a high turnover of staff in personnel sections. HR staff, particularly at processing levels, are relatively inexperienced, and receive limited formal training;
• The cost of HRM Information Systems (HRMIS) in the agencies surveyed is substantially higher than that of Best Practice. The systems are struggling to provide automated solutions to new conditions of service and, in general, aren't meeting management information needs;
• Smaller agencies face particular problems as a result of the increasing levels of complexity in personnel work. They generally lack the critical mass to be able to deliver services in a cost effective manner. Different models of service delivery need to be considered for small agencies, not only with respect to personnel services, but other common corporate services as well; and
• The management of inefficiency and under-performance is still considered to be a problem. The development of a culture of rewarding both individual and organisational performance is part of the long term answer to the present focus on attendance and prescriptive rules.

Discussion of the issues

The cost of delivering HR services

There are significant variations between the costs of delivering HR services within the 25 Government agencies surveyed, and between these agencies and Best Practice. The average overall expenditure on HR services within the APS (ie including both the cost of HR service staff and the cost of HR support systems) varied by as much as 176%, but was on average two and a half times that of Best Practice.

The fact that costs vary to the extent that they do indicates that the different service delivery models and administrative systems in use in different agencies are at least as significant a factor in determining overall costs as are the common rules within which all APS agencies have to operate.

The following graph reveals that individual survey participants invested between 1.75% and 5.75% (on average, 4%) of their people resources in HR service delivery (Best Practice invests around 1%). To put this another way, the survey participants had an average HR staffing ratio of 1:25, with individual agency ratios ranging from 1:17 to 1:55. In contrast, the Best Practice ratio for the same service is 1:100.

The above ratios are conservative, as they include only those staff who worked at least 25% of their time in HR services. Time and effort spent by line managers and staff have not been included, but a separate survey of line managers suggests that, on average, they spend about 10% of their time on HR service-related processes.

The costs of providing APS-wide services by the Public Service Commission, the Department of Industrial Relations, the Department of Finance (DoF), the Attorney-General's Department, Recruitment Services Australia, and the Merit Protection and Review Agency (MPRA), are also not included. The cost of delivering HR services in the Commonwealth is considerably higher than that of Best Practice.

The distribution of HR resources

On average, the survey participants devoted 51% of their total HR expenditure and 56% of their HR staff to administrative/processing tasks associated with pay and conditions of service, HR administration and workers' compensation, Occupational Health and Safety (OH&S), and recruitment administration. In contrast, Best Practice devotes 19% of their total expenditure and 31% of staff to these functions.

In the June 1993 publication Building a Better Public Service, MAB identified the importance of career and workforce planning, performance management, and the development and motivation of staff as being the strategically important HR issues of the 1990's. The allocation of resources in the APS across HR functions does not reflect these priorities.

The current pattern of resource use is determined by:

• The complexity of the structure and application of current conditions of service;
• Service delivery models (extent of decentralisation, checking, risk management processes, etc);
• The lack of a strategic HR focus; and
• Ineffective devolution of decision making power to line managers.

In relation to the latter focus, a review of the restructuring of the personnel function in the British National Health Service noted:

"Devolution alters the boundary between the personnel specialist and the line manager and is intended to give the latter influence over personnel decisions, allowing personnel to concentrate more on strategic issues."
(Human Resource Management Journal, Winter 1994/95)

Better practice organisations are characterised by:

• Simplified conditions of service rules with minimal effort required on non value added functions such as pay and conditions;
• An emphasis on career and workforce planning;
• Cost effective service delivery models / power devolved to line managers, with centralised processing and specialist HR advice;
• HR strategic plan integrated with corporate plan;
• A focus on performance management; and
• An awareness of the cost of service delivery, and a focus on value adding services, but not at the cost of reducing levels of service to staff.

Most HR resources are invested in administrative and processing tasks rather than in more strategic HR activities. This is the opposite of Best Practice and contrary to the priorities set for the APS in Building a Better Public Service.

Devolution and the delivery of HR services

There is often some confusion between the meaning of the terms devolution and decentralisation. Put simply :

• Devolution is about shifting responsibility for making decisions relating to a particular function. This would normally include the transfer of any formal delegations associated with the function.
• On the other hand, decentralisation is about shifting the work / which may or may not include an associated shift in the responsibility for decision-making.

Both the survey and focus groups confirmed that while managers have responsibility for much of the processing associated with HR, they generally don't have the formal power and accountability. Their views and judgments usually prevail, but costs are incurred in double handling and excessive transaction checking.

Line managers must be accountable for HR management if they are to be accountable for performance. Effective devolution of authority to line managers has been the key to creating an effective HR service delivery model in leading public and private sector organisations:

"Middle managers play a key role in the implementation of new devolved management systems and the literature suggests that increases in management responsibilities should be matched by increases in management decision making authority."
(Human Resource Management Journal, Winter 1994/95).

Effective devolution can't be achieved without effective training. Line managers rate lack of training as the most significant issue adversely impacting on the quality of what they do in people management. A soon-to-be-published OECD study entitled Governance in Transition notes that :

"Devolution will have disappointing, if not disastrous, results if managers are not provided with adequate training and support to take on tasks previously handled through central offices or agencies."

Focus groups consistently raised the issue that the lack of personnel reference material in a readily accessible format causes further difficulties for personnel staff and line managers. A library of APS reference material is available on the Commonwealth Managers' Toolbox, a CD-ROM produced by DoF, which is updated and issued three times a year. However, users generally felt that the format of the Toolbox is not user-friendly.

Only a minority of agencies surveyed involve their line managers in HR planning or process improvement initiatives. Line managers often don't understand the whole process and resist accepting responsibility.

The complexity of existing policies and processes can also be an obstacle to devolution because of the investment in training and documentation required.

Devolution is an effective management strategy when it puts the power to make all the decisions relating to a particular event in the hands of the qualified manager or supervisor closest to the information on which the decision is to be based. Decision-making is then more effective, by reducing distortions in the communication and the assessment of facts, and by reducing costs arising from double handling and time delays.

The nature and partial extent of devolution which has occurred in HRM in the APS has generally not achieved these benefits.

Better practice organisations are characterised by:

• Devolution of decision making powers to line managers;
• Line managers who are properly trained in HRM;
• A culture which supports line managers being responsible for HRM;
• Simple and easily accessible HRM reference material; and
• Information Technology (IT) systems that support devolution.

Devolution has not delivered improved efficiency and effectiveness in the APS because, generally, activity and not authority has been devolved to line managers; authority has largely been retained by HR staff regardless of whether they are local or in central areas.

Decentralisation and the delivery of HR services

The outcomes of the survey and focus groups indicate that the way in which decentralisation has been implemented has an adverse impact on costs.

The typical model for service delivery within the APS (ie the organisational arrangements / where the work is done, extent of checking, risk management processes, etc) includes the location of some (or all) functions other than central policy matters in States, Areas, and sometimes Divisions and Regions.

Developments in technology and the introduction of client servicing strategies such as service level agreements and provider/purchaser arrangements allow service standards to be maintained irrespective of location. There is no longer a need to locate personnel pay and conditions processing staff with the organisational units they serve.

A number of APS agencies have recentralised pay processing and advisory functions, and have maintained service levels and achieved efficiencies in doing so. In focus groups, managers said that what they want is day-to-day access to a more sophisticated layer of HR people who can assist them with more strategic issues such as workforce planning and development.

The survey suggests that small agencies incur a significant cost disadvantage if they choose to provide the full range of HR services in-house. There are a range of potential models for delivering such services more efficiently, including the use of specialist organisations, or extended inter-agency cooperation at either a portfolio or wider level.

Better practice organisations are characterised by:

• Transaction processing performed in the most cost effective way. Generally, this is achieved by centralising HR processing;
• Bureau advisory service for managers and staff;
• In-house HR services provided only where it is cost-effective to do so; and
• Line manager access to generalist HR resources.

The model of HR service delivery based on a philosophy of locating processing and associated advisory functions with the organisational units they serve, has led to duplication of effort and resources and has spread limited expertise too thinly.

The complexity of personnel rules and the volume of processing work

There is generally a poor understanding of the administrative costs resulting from how personnel rules are framed, implemented, and administered. In this context, personnel rules means the Acts, Awards, Regulations, Determinations and guidelines which form the framework for personnel administration. Complexity often arises from the diversity of provisions governing a particular condition of employment (for example, forms of leave) which individuals have some discretion in accessing.

It also includes how these instruments are promulgated and applied within agencies (for example, internal instructions and memoranda).

Complexity of the rules was a constant theme of focus group discussions, and is one of the reasons most of the effort in HR areas goes into administration and transaction processing.

• Examples include the administrative arrangements for pay increases flowing from agency bargaining, permanent part time work, the calculation of increments for higher duties, the reimbursement of compensation expenditure from Comcare to agencies and superannuation matters generally. The report on the focus groups at Attachment D provides more detail.
• Personnel staff estimate that up to a third of their effort goes into dealing with enquiries because the rules aren't capable of being readily understood by either staff or line managers.
• Survey participants also nominated the complexity of personnel rules as a major driver of costs and inhibitor of the quality of service available to staff and line managers.
• Both the users and suppliers of IT systems say the complexity of some pay and conditions arrangements prevents the effective automation of processing; this adds unnecessarily to labour costs.

Highly specific and prescriptive rules generate large volumes of processing work. For example, a third of pay and conditions effort is spent on leave administration. There are over a dozen main categories of leave. Within these categories there are many sub-categories, for example sick leave / without pay, half pay, with certificate, without certificate, and compensable sick leave.

In 1993/94 the agencies surveyed generated 1,360,000 leave applications, at an average of 11.8 per staff member. 57% of this leave was for a period of 1 day or less. The cost of leave administration in the agencies surveyed is estimated to be $20M.

Higher Duties Allowance (HDA) is another example of a high-volume task. In 1993/94, 716,000 higher duties pay variations were generated for the 120,000 staff covered by the survey. These are estimated to have cost $24.60 each to administer in personnel areas (the full cost of processing HDA, including line manager and communication costs, was not assessed).

At times APS-wide administrative arrangements have added to the transaction volumes and workload. The payment of Agency Productivity Pay as an allowance is estimated to have increased pay transaction volumes by 25%. Difficulties in automating this task have resulted in it generally having to be performed manually. Survey participants and focus groups also raised concerns about the complexity of the financial reimbursement arrangements between Comcare and departments. The use of trust accounts is transaction-intensive for departments. Comcare strongly supports changes to current arrangements, as they are a cause of customer dissatisfaction.

The staff of small agencies highlighted the particular difficulties they have in keeping up to date and implementing HR rules and conditions. They lack the critical mass to be able to develop and implement agency-specific policies and practices as well as deal effectively with day to day personnel administration.

Best Practice organisations have succeeded in reducing the proportion of resources allocated to processing work by:

• Establishing an organisational culture focussing on performance;
• Incorporating regular or ongoing entitlements such as shift work and some allowances into salaries, on the basis that the risks of no longer separately accounting for individual entitlements are outweighed by the benefits of the administrative savings involved;
• Simplifying entitlements such as leave and making them more flexible; and
• Adopting a risk management approach aimed at eliminating unnecessary checking of individual entitlements.

Several Commonwealth Authorities have already implemented changes along these lines. Through enterprise agreements, these organisations have negotiated a new (higher) rate of pay which incorporates entitlements such as leave bonus, overtime and penalty payments, considerably reducing the volume of processing work. Another example is the New Zealand Income Support Service, which as part of an overall approach to HR management which emphasises performance and accountability, allows for unlimited sick leave and doesn't require sick leave forms.

To move towards Best Practice in the area of pay and conditions of service, we need to find ways to reduce the complexity and volume of processing work. Changes in this area may be both general, or specific to individual agencies, or even to areas within agencies. However, experience suggests that, in the short term, such changes are unlikely to be readily negotiated at an agency level without central recognition and commitment to the legitimacy of change as part of the APS enterprise bargaining framework. An initiative along these lines has already been taken in the context of the 1995/96 APS enterprise agreement.

Better practice organisations are characterised by:

• Integration of regular and ongoing entitlements, such as shiftwork and allowances, into salary;
• Simplified entitlements which allow:
  • IT systems to automate routine processes;
  • Line managers to assume responsibility for HR decision-making; and
  • Basic HR information to be readily understood by staff and managers;
• Alternatives to high volume low value-added transactions, such as short periods of leave and HDA, which continue to meet the needs of both the staff and the organisation;
• A focus on performance, rather than attendance with its associated close measurement of all periods of absence regardless of duration or cost of monitoring;
• HR staff who are able to focus on strategic HR issues; and
• Readily available HR reference material.

The complexity of personnel rules, the way they're aplied including multiple handling and checking, and the volume of processing work generated by them, are significant causes of the high costs of personnel services in the APS.

HR planning processes

Despite the existence of the PSC's Framework for Human Resource Management in the APS, evidence from the survey suggests that comparatively few agencies integrate HR planning and corporate planning.

A number of people in the focus groups said HR processes should be linked more effectively to other corporate goals and planning processes. Many managers tend to see HR as off to one side, and there's a general perception amongst HR staff that what they do isn't valued by the organisation.

Managers referred to the need for a greater emphasis on strategic thinking in HR generally; the comparison was made between the specific direction of the Financial Management Improvement Program and the vague general direction of the HR function.

The OECD report Governance in Transition also noted that:

"There were weaknesses in most of the organisations studied in terms of translating HRM objectives into specific targets and strategies ... and in terms of the linkages between individual goal setting and performance review and organisational performance planning targets."

Managers, personnel staff and clients all said that improving the effectiveness of personnel services means a fundamental shift in emphasis from interpreting conditions, processing entitlements, auditing processes and system tracking to supporting/enabling/empowering/advising line managers on people management issues.

The challenge is to change the emphasis of our HR services from regulating outputs to supporting managers.

Better practice organisations are characterised by:

• Integration of HR plans and corporate plans; and,
• A HR organisation which supports line managers in achieving their goals and objectives

HR planning processes are not linked to other corporate planning processes. Such linkages are a central feature of Best Practice. There needs to be a shift in emphasis from interpreting conditions and processing entitlements to supporting managers in achieving corporate objectives.

Process measurement and review

The survey results show that the absence of measurement or monitoring of HR activities is a key factor contributing to the relative inefficiencies and high costs of personnel services. The general absence of measurement also suggests a lack of clarity regarding where the accountability and responsibility lies for HR outcomes. HR activities are controlled at a micro-activity level in terms of aspects such as authority and approvals. However, the absence of measurement has also led to difficulties in achieving macro-organisational control in HR activities / in expenditure and effectiveness.

Many of the processes used in personnel administration aren't subject to review of their efficiency or effectiveness. Double handling of paperwork, a concentration on process monitoring and an absence of effective Quality Assurance (QA) processes are common characteristics.

A process mapping exercise of five business practices in five agencies indicates that personnel transactions typically involve a high degree of checking and multiple handling. For example:

• The number of steps required for the payment of HDA ranged from 9 to 17. The number of checking steps ranged from 2 to 5.
• The number of steps required for the payment of overtime ranged from 14 to 28. The number of checking steps ranged from 3 to 5.
• The number of steps required for the processing of recreation, sick and special leave ranged from 10 to 29 for those resulting in pay action. In those cases not requiring pay action, the number of steps ranged from 6 to 15. The number of checking steps ranged from 2 to 7.

Some agencies are effectively utilising their HR systems to reduce the need for paper forms, but in other agencies electronic processing is paralleled by a paper trail. Duplication of data input adds to the cost of personnel transactions by extending the time required for their completion.

In most cases delegations are exercised by personnel staff, but in the better practice agencies delegations have been devolved to line managers and supervisors. Re-engineering these processes to include appropriate risk management and QA principles will reduce the number of steps required to complete personnel transactions. To adopt a risk management approach, agencies will need to assess the skills and knowledge of the staff involved in personnel transactions.

For agencies to achieve increased efficiency and effectiveness in personnel transaction processing, there is a need to accept that line areas can approve pay variations as part of the devolution of authority. Clever use of current HR systems can bring about some immediate changes. A longer-term review of IT systems in conjunction with simplification of HR rules should further decrease the cost of personnel transactions.

As well as the process mapping exercise, a review of the current arrangements for pay processing checking was carried out. In practice, agencies use a prepare/check/certify process. This is no longer a DoF requirement, but it is still embedded in the various HRMIS's (this requirement was specified in the DoF PAY System User Manual until 1 December 1994 for paper input into the PAY System).

Agencies can make immediate cost savings by defining the appropriate location and level of checking. One person should be able to process a transaction from start (approval) to finish (transmission to DoF), if that person is competent to perform the task and if there is an appropriate QA mechanism in place.

Better practice organisations are characterised by:

• Processes which minimise unnecessary checking and multiple handling of transactions;
• Delegations which are devolved to line managers and supervisors;
• HRMIS's which are used to replace routine processes wherever possible;
• The incorporation of effective QA processes into personnel administration; and
• Regular measurement and review of HR activities and appropriate follow up action.

There is limited use of process measurement and review techniques as a means of promoting efficiency and effectiveness. There are immediate and substantial gains in efficiency to be made.

Recruitment and selection

The APS puts a considerable amount of effort into selecting its staff in accordance with these principles:

• Staff should be selected on the basis of merit. The merit principle, which comprises adequate publicity, assessment against realistic standards, absence of unjustified discrimination, and ranking on the basis of an assessment of ability, is central to the preservation of an impartial APS in which staffing decisions are not influenced by favouritism or patronage;
• There is an expectation that all those who are eligible should have the opportunity to apply for vacancies; and
• There is also an expectation that the Government should be a model employer, which means following practices which exhibit integrity and can withstand external review.

Survey participants are estimated to have spent $27.6M in 1993/94 in managing and administering competitive selection processes (excluding base level positions filled through the Department of Employment, Education and Training (DEET). This figure doesn't include line management time in preparing documentation, nor does it include time devoted to the selection process by individual selection advisory committee members and line managers.

Key findings from the survey include:

• The remarkable volume of activity / there were 30 hires per 100 positions during the 12-month period surveyed, compared with 7 per 100 in Best Practice (hire = a recruit selected via a merit selection process). In the APS, competitive selection processes are the primary tool used for filling longer term job vacancies; among the survey participants, 15,000 employees (or 13%) were on HDA for periods in excess of 3 months. During the same period the separation rate in the APS was 6%;
• The cost / the average cost to survey participants was three times that of Best Practice;
• The efficiency / survey participants achieved on average 42 hires per recruitment staff member, compared to 67 in Best Practice; and
• The effectiveness / filling positions (both permanent and long term HDA) took three times as long in the APS (average = 96 days) as in Best Practice (30 days). However, only 55% of officers selected to fill a long term vacancy had remained in the job for which they were selected after six months, compared to 96% in Best Practice.

A separate review of gazetted promotions showed that the average elapsed time from notification of a vacancy until the promotion of a successful applicant exceeded 120 calendar days, and 92% of promotions and 58% of transfers are internal.

Recruitment and selection processes featured strongly in focus group discussions. There was universal agreement that the merit principle is, and should continue to be, central to APS selections. However, there is a widespread perception that the current processes aren't always the most efficient and effective vehicles for the application of merit:

• Focus group participants said there should be a greater emphasis on getting value for public funds rather than selecting the best person regardless of cost to the organisation. The concept of merit should include the notion of value to the organisation;
• The recruitment process is often used as a proxy for performance management; it's the only way some staff receive performance feedback from their supervisor. This is a misuse of the selection process which adds time and cost for no added value;
• Documentation requirements in agencies are often excessive;
• Success is seen to require compliance with a prescriptive set of processes, rather than an understanding and demonstration of the principles of fair and effective decision-making. Improvement will require re-learning on the part of staff; and
• Existing selection processes are not necessarily the best or the only way to select the best applicant in accordance with the merit principle. Focus group participants referred to a number of alternatives, some of which are already in use in the APS (see Attachment D).

Officers of the MPRA also questioned whether the current process is the most efficient way of undertaking merit-based selections, given that the current system requires high levels of documentation. They saw benefits in delegates being members of committees, but they noted that although this might be more efficient in use of resources, it would need to be complemented by a right of appeal to ensure that the system wasn't subject to abuse.

MPRA officers shared the view that many recruitment decision-makers operate on the basis that compliance with the process is synonymous with the principles of fair decision-making. They agreed that the emphasis should be on selecting the most meritorious applicant, and that the process needed to be designed to achieve this outcome, and to allow verification that it had been achieved, with a minimum use of resources.

Recent APS strategies to improve client service typically involve the delegation of decision-making powers to the lowest qualified level so as to increase responsiveness and reduce delays and communication problems. The use of delegated authority in relation to selection and recruitment doesn't follow this pattern. The authority to select staff is narrowly delegated. Delegates don't usually sit on Selection Advisory Committees, and are therefore remote from the facts on which they make their decisions.

In the APS, the considerable resources involved in recruitment functions are occupied primarily in process compliance and administrative functions. In comparison, Best Practice approaches the filling of positions within a broad context of business and workforce planning, and the development, career planning and progression of staff. The selection and recruitment process is only one of a number of strategies used.

The survey results, the comparison of APS selection processes with Best Practice, and the views expressed by focus group participants and line managers raise significant issues regarding both the efficiency and effectiveness of selection processes. There is room for a critical re-evaluation of how APS positions can best be filled efficiently, effectively, and in accordance with the merit principle. Such an evaluation should focus firstly on the principles which underlie APS selection processes, and then on whether the existing processes are the best way to give effect to these principles.

Better practice organisations are characterised by:

• Managers being responsible for and directly involved in selection decisions;
• A broader definition of merit which encompasses personal attributes and attitudes and a focus on achieving value for money to the organisation;
• Minimal documentation requirements and streamlined appeal mechanisms;
• Management of turnover, and a cultural expectation that people will remain in jobs for some minimum period. This provides a better balance of organisation needs and individual needs;
• Career/succession planning which minimises the need for external recruitment;
• Pro-active performance management which has the effect of minimising the use of recruitment as a proxy;
• Minimised above-base recruitment due to greater effort into the quality of base level recruitment and an emphasis on training/succession planning of staff;
• Effective IT support in monitoring the process and generating routine paperwork;
• Appropriate use of probation/trial employment; and
• People operating at higher levels as a normal part of their training and development without separate compensation.

The APS invests considerable resources in administering competitive selection processes. However, both the survey results and focus groups have highlighted a number of issues regardng the efficiency and the effectiveness of current arrangements.

Staffing issues

The survey has established that HR staff in the agencies surveyed are relatively inexperienced. The average length of HR experience overall is 5.7 years, although the average in some organisations is as low as 1.3 years. 45% of HR staff have tertiary qualifications, including 8% with post-graduate qualifications. In comparison, 88% of Best Practice HR staff have tertiary qualifications, including 19% with post-graduate qualifications.

In the agencies surveyed, the average turnover of staff leaving the HR area (ie transfers, resignations, redundancies) was 24% in the year surveyed. The average turnover for each position within personnel (which includes moves to other positions within the HR function of the agency) was 197%. HR staff receive an average of 2.5 days formal off the job training a year, compared to 9 days in Best Practice.

Focus group participants at all levels in the HR environment pointed repeatedly to increases in both the workload and the complexity of personnel work in recent years. The de facto base grade in personnel is ASO3, and the general consensus is that it takes 6 to 12 months to train someone to the point where they're able to effectively administer pay entitlements and basic conditions of service / more if there are additional complexities such as remote area entitlements, shift work, or a wide variety of staff to administer.

Personnel work is generally perceived by personnel staff to have comparatively low status in their organisation. There is a broad perception by personnel staff that they can get an easier job outside the personnel environment without the continual pressure of having to meet the next cut-off, and where the work will be more fulfilling and often better paid.

People said it's relatively easy for staff to find a job outside personnel, but much harder to attract them. They perceive that there are difficulties in backfilling jobs due to the limited pool of available staff to draw on, and chronic recruitment problems in some locations. They also said these problems are exacerbated where personnel functions have been either decentralised or devolved / good personnel staff get snapped up, and in time may move away from personnel administration entirely. The overall result is perceived to be a general de-skilling of personnel areas.

A comparison between APS and Best Practice HR costs and staffing levels shows that although staffing levels in the APS are much higher than Best Practice, total salary costs indicate that APS HR staff are generally lower paid than HR staff in Best Practice. HR skill levels, the strategic nature of the work and remuneration levels are all higher in Best Practice.

In the APS, the need for strategic human resource management skills have already been recognised as being essential, and have been included in the Joint APS Training Council core competencies for administrative staff.

Better practice organisations are characterised by:

• Highly qualified HR staff;
• Comprehensive job-related training provided to HR staff;
• The status of work performed by HR staff is valued; and
• Strategic HR management / fewer, better trained, better qualified and therefore better paid staff whose focus is on supporting managers rather than transaction processing.

There is a high turnover of staff in personnel sections. HR staff, particularly at processing levels, are relatively inexperienced, receive limited formal training and perceive their jobs to have low status.

HR Management Information Systems

The average expenditure on HR Management Information Systems (HRMIS) in the agencies surveyed is $133 per staff member, compared to Best Practice expenditure per staff member of $40.

The higher expenditure has not translated into greater efficiencies, largely due to the complexity of processes and only partial automation of activities, many of which still require manual checking and certification of hard copy and system data at a number of locations and levels. In general:

• Systems are struggling to meet their primary role of automating routine personnel transactions;
• They're slow to incorporate changes to conditions of service;
• An increasing number of actions are being processed manually; and
• System managers argue that the lack of automation is being driven by the undue complexity of the rules / for example, permanent part time leave.

Systems, both APS and commercial, can cope with multiple users, as evidenced by those that currently service a number of agencies. However, the capacity to automate certain procedures where the rules vary between client agencies is often limited (the system allows the recording of entitlements, but doesn't automate calculations).

All systems have the capacity (to varying degrees) to support remote processing of transactions and access to personnel data such as leave records. However, few agencies have devolved the approval of routine transactions to line managers. To enable this to happen, some up-front investments have to be made in technology, training and support for line managers.

All HRMIS managers agree that devolution is the key to more efficient processing of personnel transactions.

Systems are expensive to maintain, and ongoing costs are not likely to fall in the foreseeable future given the rate of change in the personnel environment and the trend towards increased complexity.

It is clear that the diversity of systems leads to significant duplication of effort and cost, and there should be some rationalisation of the range of systems from which agencies can choose. This goal is consistent with the March 1995 report of the Minister for Finance's Information Technology Review Group on the use of IT in the Commonwealth (Clients First), which recommended that the number of administrative systems in use across agencies should be restricted.

Better practice organisations are characterised by:

• Simple rules which allow high levels of automation;
• Distributed technology which provides on-line access to staff and managers;
• Managers who approve and input routine transactions such as leave, which are then processed without HR intervention;
• User-friendly HRMIS's with supporting documentation/training; and
• A cultural expectation of minimal payroll support / for example, staff arrange deductions through banks or manage their own deductions through the payroll system.

The cost of HRM Information Systems in the agencies surveyed is nearly four times that of Best Practice. The systems are struggling to provide automated solutions to new conditions of service, and in general, are not meeting management information needs.

Small agency issues

As part of the consultation process, focus groups were run specifically for small agencies, and staff from various small agencies also took part in many of the other focus groups.

Small agency participants put the view that there is a significant effort required just to come to grips with the requirements of personnel administration. Complying with these requirements can determine how smaller agencies structure their HR resources, and can inhibit the extent to which they can provide more value-added services.

Small agency participants agreed that the issues relating to corporate management as a whole, including HRM, have now become so complex that small agencies should consider cooperating more closely with each other to meet their needs, not only with respect to the provision of personnel services but also regarding the best way to meet their overall corporate management requirements. Co-operation would depend on there being a critical mass of interested agencies.

Small agency representatives say they need access to a pool of experienced and knowledgable personnel practitioners or "bank of knowledge", but they often lack the size to retain skills in these areas. The problem of staff turnover in personnel areas is exacerbated in smaller agencies.

There is a perceived need for a better process to disseminate knowledge and policy on HR matters / perhaps similar to Comnet, but at a lower level (eg HR managers). The role of the Personnel Operations Program should be reviewed and strengthened if necessary to meet this need and other HR training and information needs identified as part of this report.

Better practice organisations are characterised by:

• Outsourced HR services where it is not cost effective to provide them in house; and
• Skilled generalist practitioners available to provide advice and support to line managers.

Smaller agencies face particular problems as a result of the increasing levels of complexity in personnel work. They generally lack the size to be able to deliver services in a cost-effective manner. Different models of service delivery need to be considered for small agencies, not only with respect to personnel services, but other common corporate services as well.

Inefficiency and performance management

"Successful management of staff performance in the APS depends on the responsible use by managers of established procedures... Integral to these processes are clear articulation of work expectations by supervisors, regular review of achievement in which staff can participate, willingness by managers/supervisors to discuss the strengths and weaknesses of the individual, to plan ways to overcome identified weaknesses and to face up to problems."
(A Framework for Human Resource Management in the APS)

Focus group participants at more senior levels raised the issue of inefficiency and under-performance on a number of occasions. People made the following points:

• Managers are still reluctant to bite the bullet with under-performers, largely because they believe the system doesn't support them. However, with increasing resource pressures, it's no longer possible to ignore under-performers.
• There are too many avenues of appeal. People can (and do) pursue appeals through a number of channels, and there is a perception that everything can be hidden under the umbrella of stress. (MAB notes that the review of the Public Service Act is a positive step in this regard, and also notes the paper by Comcare Australia at Attachment H which outlines current initiatives to address the emerging cases of occupational stress in the APS).
• There is widespread agreement that the existing processes are weighted heavily in favour of the individual. The outcome is perceived to stand or fall on the process, rather than the merits of the particular case.
• Several people said there should be some easier process for situations where efficiency may or may not be questionable, but neither the organisation nor the individual want to stay together (also addressed in Public Service Act review). Redundancy is often used as the vehicle to achieve an outcome in inefficiency situations, but this creates a perception within the organisation of reward for inefficiency.
• The view was also put that there can be a fine line between inefficiency and discipline, although the processes are completely different. Discipline is seen to be a legal minefield, where everything has to be proved, with close attention to due process and even to the way the charges are written. Inefficiency at least puts some onus on the individual to perform.

MAB notes these views, and considers that effective people management remains a key issue to be addressed.

Line managers are primarily responsible for managing their people:

"The belief that people are the key to getting maximum performance from our organisations has led to a growing emphasis on an integrated approach to human resource management, where responsibility for the way people are treated and managed is shared by line managers and is no longer just the responsibility of the corporate support area. ...Every manager has people management responsibilities and needs to apply all that is involved in good people management."
(A Framework for Human Resource Management in the APS)

The devolution of responsibility for, for example, selections and leave administration needs to be accompanied by effective support processes / adequate training and resources, appropriate guidelines and support systems, and access to expert advice. HR areas can add value by being more pro-active in supporting and providing expert advice to managers within the context of overall guidelines.

MAB believes that in the longer term, many of the current issues in personnel administration are likely to become less of an issue as the APS moves towards a culture of performance at both the individual and organisational level.

Rewarding staff on the basis of what they produce, rather than how long they're at work, is central to this. This is not new / the philosophy already underpins performance at the SES and Senior Officer levels, and is a key element of enterprise bargaining. The expected level of performance within normal working hours becomes a matter of negotiation, and the focus of HRM shifts over time from managing, for example, attendance patterns, to managing performance in accordance with agreed goals and objectives.

A number of organisations have already moved positively in this direction by introducing the use of performance measures as an integral part of an overall continuous improvement strategy. MAB believes there are some useful lessons for the APS in this regard, and encourages all organisations to seek out some of the better practices.

Better practice organisations are characterised by:

• A balance between organisational needs and individual rights;
• Minimal avenues of appeal; and
• A performance culture which has the following characteristics:
  • Clear goals and objectives at organisation and individual levels;
  • Emphasis on performance feedback;
  • Rewards on basis of outputs not attendance;
  • Staff are valued; and
  • Sanctions and rewards which reflect the value of effective people management.

The management of inefficiency and under-performance is still considered to be a problem. The development of a culture of rewarding both individual and organisational performance is part of the long term answer to the present focus on attendance and entitlements.

The way forward: Towards best practice

MAB believes the capacity exists to significantly improve the performance of the APS in the delivery of HR services / indeed the arguments for fundamental change are compelling.

Leading organisations have recognised the link between organisational objectives and people practices in order to gain a competitive advantage through motivated, developed and empowered employees. This goal is a major part of their HR strategies. These organisations have most or all of the following characteristics:

• Strong and visible leadership, and a shared vision for the organisation;
• Clear corporate goals and priorities, with HR goals directly supporting these goals and priorities;
• Open communication at all levels;
• Loose/changing structures readily able to adapt to change, with a primary focus on teamwork;
• Devolved delegations;
• People are valued:
  • The basic assumption is that they're trustworthy;
  • Employees are empowered to make decisions within agreed parameters; and
  • Rewards/sanctions within the organisation reflect the value of effective people management;
• A co-operative industrial climate;
• A focus on continuous improvement:
  • Performance measurement and monitoring at organisational, team and individual levels;
  • Rewards linked to performance, not attendance;
  • An emphasis on quality;
• A learning organisation:
  • Continuous learning; manager as coach; and
  • Employees develop the skills to solve problems, and are taught critical thinking processes for understanding what the organisation does and why it does it.

These organisational characteristics effectively define the culture of an organisation. A key role of the HR area in better practice organisations is to facilitate and support the development of these characteristics.

APS organisations must develop their own strategies to move towards Best Practice, but it would be difficult to implement fundamental changes to HR practices without recognising the wider cultural implications / for example, by adopting more flexible sick leave arrangements without first addressing other issues such as working in teams and focussing on performance.

Some examples of the areas in which leading organisations (both APS and Best Practice) have streamlined their HR practices are highlighted throughout this report. Common features of better practice organisations include:

• Simplified processes and policies;
• Centralised transaction processing;
• HRM practitioners trained in strategic human resource management;
• A service centre/bureau to provide customer support;
• Devolved authority;
• Trained line managers; and
• Distributed technology.

The need for a coordinated approach to change

This report identifies a number of issues which both central and individual agencies can begin to address now. However, given the degree of change required, unco-ordinated change is not likely to achieve maximum benefits because of the inter-relationships between the various factors determining costs and effectiveness. There is a considerable risk associated with activity which addresses the symptoms rather than the causes of current deficiencies, and which fails to address the principles underlying the existing administrative processes.

MAB has therefore endorsed an overall strategy aimed at achieving fundamental and sustainable change in the APS.

A joint and co-operative approach to the issues raised in this report will be the key to fundamental change. A number of initiatives have therefore been included in the 1995/96 APS enterprise agreement (Continuous Improvement in the Australian Public Service Enterprise Agreement: 1995/96). This agreement includes a commitment by the Government and APS unions to address all of the issues raised in this report, as well as agreement on specific initiatives relating to:

• The rules for incremental advancement;
• Salary on movement between ranges;
• Permanent part-time working arrangements;
• Annual leave loading;
• Higher duties;
• Short-term leave; and
• Further work to identify how to move towards Best Practice in the delivery of personnel services and the overall operation of the HR function in APS agencies.

Together with the continuing rationalisation of the APS award structure, simplification of award provisions, and the review of the Public Service Act, these initiatives are expected to result in a substantial reduction in complexity and workloads in personnel areas and increased effectiveness in the delivery of personnel services.

What agencies can do now

Without losing sight of the need for an integrated approach to change, if best practice is to be achieved, agencies individually or collectively can act now to address the following issues:

• Effectively integrating their corporate and HR planning processes;
• Overhauling the design of the processes used to deliver HR services, including the use of existing IT systems, risk management plans and QA mechanisms;
• Ensuring the efficient delivery of transaction processing-based services (in-house services provided only where it is cost effective to do so);
• Reducing complexity and work loads by rationalising/simplifying the administration of entitlements;
• Giving priority to developing the skills and experience of their HR staff;
• Delegating the power to line managers to manage their own people, together with provision of the necessary training;
• Reforming internal selection and recruitment practices and processes, particularly questioning the current level of documentation they require;
• Giving greater emphasis to career and workforce planning;
• Implementing an effective performance management culture; and
• Deciding whether in-house provision of some services is cost effective for smaller agencies.

Pilot projects

MAB has decided to undertake a second stage of the Achieving Cost Effective Personnel Services project, with the aim of demonstrating cost-effective strategies for change which can be adopted by all APS organisations.

During the second half of 1995, the MIAC project team will work with a small number of agencies (three or four), to develop, in detail, a plan for how they can move towards best practice in the strategic delivery of HR services, including:

• What they want from their HR services;
• The extent to which current services meet these needs;
• What they need to change to move towards best practice in HR service delivery; and
• How such changes might be made, and the costs and benefits involved.

The outcomes of this stage of the project will be:

• Participating agencies will have a sound business case for justifying sustainable change in the way they deliver their HR services, a blue print about how they will get there / including quick wins which can be achieved along the way / and the skills to do so;
• MAB and MIAC will have evidence to refer to in encouraging other organisations to adopt the findings and conclusions of the project; and
• MAB and MIAC will also have a clearer understanding of those policy and other issues outside the control of individual agencies which inhibit the achievement of best practice.

These objectives are expected to be reached by the end of 1995, with implementation in these agencies planned to commence during the first half of 1996.

The role of central agencies

MAB encourages central agencies to address these issues:

• Further encouraging strategic human resource management through promotion of the Human Resource Management Framework and supporting advice on good practice;
• The recruitment and selection process;
• Further development of competencies in human resource management through continued training and development of people management skills in the APS;
• Access to information regarding conditions of service (simple and readily accessible HR reference material);
• The processes for reimbursement of funds between Comcare and agencies; and
• The needs of the APS in relation to HRMIS's, and the interrelationship between these systems and the DoF PAY system.

While technology will be an important enabler of change, there appears to be limited value in further automating some of the existing processes or upgrading the existing HRMIS's until the pilot projects and the initiatives contained in the 1995/96 APS Enterprise Agreement have provided clearer directions on the priorities for change. There is little point in making substantial system changes without first addressing the complexity of some of the processes.

In the meantime, this report, with its implications for the overall development and co-ordination of HRMIS's in the APS, has been referred to the Chief Government Information Officer for consideration.

Monitoring and measuring future changes in HR administration

Without under-estimating the degree or the nature of the changes required, MAB believes it should be possible to make substantial progress towards Best Practice in the next few years if all of the above issues are constructively addressed.

Against measures of effectiveness, MAB considers that the implementation of the outcomes of the proposed projects in a number of agencies in the second half of 1995 should be able to be commenced in those agencies during 1996. This should point the way clearly for more fundamental changes in HR to then be made later in other APS agencies.

Substantial progress should also have been made on those issues addressed as part of the 1995/96 APS Enterprise Agreement. Central agencies should also have moved to address those issues outside the direct control of individual agencies.

In other areas, agencies can move immediately to make whatever improvements are considered necessary to their own internal administrative processes, and should consider implementing suitable arrangements for monitoring their future performance.

The differences between the public sector and private sector Best Practice notwithstanding, MAB considers that it should be possible for the APS to have significantly bridged the gap between its overall performance and that of Best Practice within three years, and for some individual agencies to have reached Best Practice.

Consistent with the notion of continuous improvement in HR administration, MAB therefore intends to conduct a further survey of personnel/HR services in early 1998. In the meantime, MAB encourages all APS agencies to accept the challenge and take positive steps to move towards Best Practice in personnel/HR services.

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Attachment A: Terms of reference

Purpose

The purpose of the Project is to assist in the equitable, effective and efficient administration of the APS by gathering and analysing information for the Management Advisory Board on:

• service standards in personnel practices and services across the APS;
• the costs of personnel practices and services; and
• whether agencies cost their personnel practices and services and, if they do, how they do this.

It is not envisaged that this Project would inquire into the desirability or otherwise of any particular practice or recommend alterations of legislation or changes to central agency guidelines, but the major cost factors in types of transactions should be clearly identified. The Project would aim to communicate and share good practice. However, any comments that the Project Team might wish to make on possible changes to the law or practice could be passed on for possible reference to the Public Service Act Review Group.

The Project would build on work already done in agencies. The Project would also include some non-APS agencies in the Commonwealth sector whose basic terms and conditions are broadly similar to those of the APS.

Personnel services are taken to be the following transactions in relation to individuals:

• recruitment for appointment at base;
• selection for promotion or appointment (above base);
• payment of salaries and allowances;
• determination of other terms and conditions;
• management of leave (LSL, recreation, LWOP);
• management of illness and injury;
• grievance resolution;
• inefficiency procedures;
• discipline procedures; and
• separations.

The Project, after some initial data gathering, will focus on a selection of these services.

The Project would not confine its examination of costings only to costs directly incurred in traditional personnel areas. All identifiable components of the personnel practice under examination will be costed, including where practicable and relevant managerial time in making personnel related decisions.

The Project would include managerial time in making personnel related decisions so that there is a recognition of the extent of devolution within agencies and the usefulness of the support systems that are available and used.

Key issues

• Does a cost analysis (including a comparative look) indicate that there are any significant practices in a cost sense?
• What are the components of the current costs of these practices and processes?
• Do the currently available methodologies of costing provide a realistic picture of the costs of personnel practices? For example, does activity based costing have more general application outside agencies already using it?
• Are there significant differences in costs between agencies or between different parts of the same agency? What factors contribute to these differences?
• Are there examples of personnel resource use before and after a function was transferred out of the APS?
• What cost differences, if any, can be attributed to the extent of devolution within the agency of any particular personnel practice?
• Are there significant differences between agencies arising from different standards of service? What are the implications associated with any such differences?

Consultative arrangements

All APS agencies will be approached to provide the relevant information.

Networks (such as POP and RDN) will be approached for qualitative information and to obtain support for the information that we are seeking from agencies.

Attachment B : Analysis of existing data

Project officer - Erik Beens

Introduction/ Background

This is the report of the first stage of the MIAC project on 'Achieving Cost Effective Personnel Services' in the Australian Public Service (APS).

The aim of this stage of the project was to see if any broad conclusions could be drawn from available data in particular on costs and approaches to costing .

Data was requested and obtained from a number of sources including Government departments, agencies and Government Business Enterprises (GBEs) as well as documentation relating to annual benchmarking studies conducted by two consulting firms.

Extent of data availability

Initial indications were that this stage should concentrate on analysing data from Organisation numbers 10, 13, 11, and 8. Other useful sources could be Organisation 5, and where possible, data from organisations which had participated in annual benchmarking surveys of Human Resources (HR) with Companies 2 and 1. There was also some basic information provided to the project team from several other Government organisations.

Table 1 shows the information available from organisations.

Llimitations of available data

In all cases, the data available is limited in its usefulness for the project. This is because in most cases it has been collected for internal comparisons and budgeting purposes and has been collected on a variety of bases.

For example, in costing HR activities, some organisations have based costs on top of the range salary costs excluding any allowances or overheads. In other cases, costs have been calculated on a total cost basis including overheads, accrued leave and superannuation costs etc.

Cost comparisons across organisations have not been carried out as the data available is not suitable for such comparison and the results could be misleading.

The data is basically quantitative in nature and contains insufficient qualitative information which could assist in explaining data variations.

Data relating to Organisation 5 does not include Head Office data; this could have a minor effect on the overall figures for that organisation.

While most of the data is recent (ie 1993-94) some of the data relates to 1991-92 and 1992-93. However, the earlier data has only been used for basic Total staff to HR staff (ie Staff / HR staff) ratios and is considered to be still valid.

Another limitation which became apparent is that of definition. Organisations group different activities within HR under different headings. Inevitably the data has been collected on the basis of the categories used by that organisation and disaggregation is not possible.

Table 1

Organisation	Data / information available
Australian Maritime Safety Authority	Detailed % of effort data and budgeting data for HR services as part of Corporate Services
Australian Taxation Office	Detailed % of effort data and costs for HR services as part of Corporate Services annual survey
Civil Aviation Authority	Number of staff dedicated to HR activities
Commonwealth Bank	Ratio of total staff / HR staff
Department of Administrative Services (DAS)	Basic ratio of clients / HR staff
Department of Veterans' Affairs	Detailed benchmarking data on payroll processing function
Department of Industrial Relations	Summaries of Government bodies' workplace bargaining status
Department of Finance	Report on the Evaluation of Resource Policies and Management Branch
Department of the Prime Minister & Cabinet	Report on the review of Corporate Services
Australian Customs Service	No data available
Department of Human Services and Health	Detailed % of effort data for state offices
HRM Consulting benchmarking report	General results of survey
Price Waterhouse benchmarking report	General results of survey

Analysis

The only point of comparison which could be made based on the data provided by organisations was a high level efficiency measure of the ratio of Total staff to HR staff. This ratio allows a comparison to be made with the results of annual benchmarking surveys.

The ratio of Total staff to HR staff obtained from the analysis is significantly lower than the ratios reported in the annual benchmarking surveys. Table 2 graphs this information. While there is a marked difference in the ratio, all three sources have a wide range. This analysis ranges from 14:1 to 60:1 with a median of 32:1. Company 2's survey ranges from about 25:1 to over 1300:1 for the public sector with a median of 70:1 and Company 1's survey ranges from 22:1 to 115:1 for the public sector with a median of 60:1.

A quick look at the size of the organisation against the ratio of Total staff to HR staff gives a vague indication that there may be some correlation; however, there is sufficient variation in the data to throw doubt on this. Company 2's survey found no significant variation to the ratio related to organisation size. The organisation size is plotted on the Total staff to HR staff graph in Table 2.

Only data from Organisations 5 and 8 were sufficiently comparable to allow a detailed analysis. In the case of Organisation 5, the regional Offices were treated as separate agencies to allow comparison of a number of similar (but differing size) agencies.

The analysis showed that Pay and Conditions activities make up around 40% of the total HR effort and this implies that much of the HR function cost is centred around this activity.

Recruitment, OH&S, Personnel Policy and Staff Development activities all hover around the 11-15% of the total HR effort while Industrial Relations and HR Information systems account for the rest.

Table 3 graphs percentage of effort data as well as other comparative data.

Conclusions

What became apparent from this phase of the project was that:

• While some organisations had carried out internal reviews of the costs and effectiveness of the HR function, often as part of the broader Corporate Services function, it is difficult to use this data for comparison across the APS because of differences in the data collected.
• There is insufficient data to allow cost comparisons between organisations from available data because of the differences in how costs were calculated.
• It is essential for HR data to be collected across the APS on an identical basis before really useful analysis can be carried out. In particular the definitions of HR activities must be clear and consistent across organisations.
• There are certain HR functions which tend to be more resource intensive than others and these should be investigated in depth; particularly Pay and Conditions.
• There are likely to be significant differences in performance between offices in decentralised organisations.
• Care will need to be exercised in the collection of data to ensure that as much of the HR effort as possible is recorded.

Table 2 Proportion of Human resource Staff to total organisational staff

 

Organisation	No of staff Org size	No of HR staff	Staff/HR staff	HR staff/ total staff as %
Organisation 9	477.00	35.00	14.00	7.34
Organisation 8	450.00	26.00	17.00	5.78
Organisation 7	950.00	40.00	24.00	4.21
Organisation 6	4729.00	143.00	33.00	3.02
Organisation 5	15802.00	488.00	32.00	3.09
Organisation 4*	9715.00	168.00	58.00	1.73
Organisation 3	n/a	n/a	60.00	1.66
Median			32.00	3.09
* Does not include staff development
Company 2	n/a	n/a	70.00	1.43
Company 1	n/a	n/a	60.00	1.67
Note: n/a = not available

Table 3 compares % of effort, number of HR staff and the ratio of Total staff/HR staff across two organisations

 

% of effort
	Org size	Total HR staff	Pay and Conditions	Recruitment	OH&S, Comcare	Personnel Policy	Staff development	Industrial Relations	Systems/MIS
Org. 5	15802.00	488.30	36.17	15.40	15.24	10.30	14.15	6.31	2.44
Org. 8	450.00	26.04	44.15	12.02	11.64	15.32	11.60	2.96	2.11
HR staff
Org. 5	15802.00	488.30	176.60	75.20	74.40	50.30	69.10	30.80	11.90
Org. 8	450.00	26.04	11.55	3.13	3.03	3.99	3.02	0.77	0.55
Total staff / HR staff
Org. 5	15802.00	488.30	89.48	210.13	212.39	314.16	228.68	513.05	1327.90
Org. 8	450.00	26.04	38.96	143.77	148.51	112.78	149.01	584.42	818.18

 

Attachment C: Deloitte Touche Tohmatsu report

Deloitte Touche Tohmatsu was engaged to collect detailed and consistant information on personnel/HR services from a representative subset of agencies covering approximately 70% of the Australian Public Service, as well as comparativeinformation from a number of private sector organisations.

This Attachment is only currently available in hardcopy. Anyone wanting a copy should request it from a library that holds the item.

Attachment D : Report on focus group discussions

Project officer - Mike Cassidy

Consultation methodology

• All APS agencies were invited to participate in a total of thirty focus groups held in Canberra, Sydney, Melbourne, Brisbane and Perth during March and April 1995.
• Separate focus groups were run for SES officers responsible for HR functions, Regional Directors, HR managers, and personnel staff, as well as for line managers as clients of personnel services. Specific focus groups were also run to pick up the views and concerns of small agencies, and brief discussions were also held with managers of the more common HR systems.
• The focus groups were loosely structured to draw out
  - What people saw as the main issues driving both the costs and effectiveness of personnel services
  - What they believed the characteristics of an effective and cost-efficient service would be
  - What elements of the current personnel environment they thought would have to change in order to achieve an effective and cost-efficient service.
• Within this context, people were free to raise issues as they saw fit, and free-flowing discussion was encouraged. No two focus groups were the same, although the same key issues tended to come up in a number of focus groups and some consistent themes did emerge. The main issues are outlined in the following report.

The views reflected in this report are those of the focus group participants.

Summary of focus group participant comments

Focus group participants put a broad range of views to the Project Team. The following summarises the themes that emerged.

• HR processes should be linked more effectively to other corporate goals and planning processes. Personnel staff spend more time processing transactions and interpreting rules - turning wheels - than supporting managers in achieving their organisational objectives.
• The rules for various personnel functions are perceived to be overly complex, and have increased in complexity in recent years. An inordinate amount of time is spent on managing the processes, rather than achieving outcomes. Participants perceive that in many areas of personnel administration, the processes have taken over.
• The administrative arrangements for agency bargaining have created further work for personnel areas. The downstream effects of implementing change should be taken more into account when they're being negotiated.
• The complexity and diversity of personnel terms and conditions is compounded by the lack of consolidated information to support decision-making, and the inability of current HR systems to effectively automate many personnel processes.
• Turnover, particularly at the lower levels, is high in personnel areas. There are increasing difficulties in attracting and retaining staff, particularly at the personnel operative (ASO 3) level. Personnel staff consider their work to be undervalued and accorded low status.
• There is still some confusion concerning devolution and decentralisation - often the processing has been devolved, rather than the power to make decisions. Where there have been problems with the devolution of decision-making power, it has been because some of the necessary support structures weren't in place. Education of line managers is critical in this respect.
• Managers consider they should be able to make the key decisions in staffing matters within their area of responsibility. However, many managers are neither interested nor skilled in people management. For managers to be able to take greater responsibility, they need to see human resource management as a fundamental part of their role.
• The principle of merit selection is important, but people consider that the existing process designed to apply the principle is flawed in a number of respects. They perceive an emphasis on process to be driven by the threat of appeals.
• Participants believe too much time is spent on the processes associated with inefficiency and under-performance, grievances, investigations, appeals, stress cases, etc. The management of inefficiency and under-performance is still considered to be a problem. People perceive that the processes are weighted heavily in favour of the individual.
• To improve the effectiveness of personnel services, a fundamental shift in emphasis is required from interpreting conditions, processing entitlements, auditing processes and system tracking to supporting/enabling/empowering/advising line managers on people management issues. The emphasis should be on supporting managers, not regulating outputs.
• Small agencies should co-operate more closely with each other to meet their respective needs, not only with respect to the provision of personnel services but also regarding the best way to meet their overall corporate management requirements.

Focus Group Comments - Complexity of the Rules

"Until we understand the implications of the complexity we build into the rules, we won't change how we do it"
NSW Regional Director

• Participants in all of the focus groups said that the rules for various personnel functions are overly complex, and have increased in complexity in recent years. Personnel staff spend far more time processing transactions and interpreting rules - turning wheels - than supporting managers in achieving their organisational objectives. Continuing changes in the personnel environment only serve to compound matters.
• Personnel staff consider they have an obligation to get things right - there are audit requirements regarding accountability for the expenditure of public funds, and the pockets of their clients are directly affected by most of what they do. Because of the general level of complexity, there is some reluctance to delegate processes to line managers (and for line managers to accept the delegation), particularly where there are dollar implications. Personnel staff and managers can make a particular interpretation, and find themselves undone by legal bodies further down the track.
• There are a number of areas where the increased degree of complexity is largely outside the control of APS managers (for example, recent changes to taxation legislation and superannuation entitlements), but there's a strong view that there have been changes in other areas of administration where there appears to have been little or no consideration beforehand of the downstream effects of their implementation. Participants in the focus groups pointed in particular to the increased administrative workload arising from the way in which arrangements for agency bargaining and permanent part-time work have been structured.
• People put the view that we have built in varying degrees of complexity to ensure that equity is maintained as far as possible, but we're paying a high price for it.
• Participants generally agreed that the extent of overall complexity leads to inconsistencies as the rules are interpreted differently within and between agencies. Inconsistencies, particularly within an agency, can be a major source of grievances. However, there are already inconsistencies between agencies in conditions of service. Perhaps there's a need to acknowledge that absolute consistency has already disappeared.
• Inconsistencies can be a particular problem in a devolved environment, as the people who are charged with interpreting the rules often don't have the experience or expertise to deal with specific issues, and the tools aren't there to help them (eg plain-English interpretations of policies). In such an environment, managers may have greater discretion in making personnel-related decisions, but the rules become increasingly blurred, there is a diversity of decisions, an increasing need to develop specific policies - and hence increased costs.
• A number of examples were put forward where people took the view that the APS is generous in its conditions of service, but at some cost:
  There are an inordinately high number of transactions for small amounts of leave and HDA in most agencies, all of which serve to keep the wheels turning in personnel areas. Participants agreed that the prevailing culture in the APS is that it's OK to take leave at any time.
  - Allowing people to take long periods of leave without being unattached, resulting in chains of long-term acting arrangements.
  - The provision of automatic deductions and advance pay processing.
  - Carryover of conditions - eg the right to have all periods of previous service counted for purposes of LSL and superannuation provided there hasn't been a break of more than 12 months; and the right to return and be given a job after 3 years on mobility outside the APS (small agencies noted particular difficulties in this regard, where the options for placement are strictly limited - the view was put strongly that there should be more onus on the individual to find him/herself a job). [Note: This latter issue has been addressed in the McLeod review of the Public Service Act.]

The administration of agency bargaining

• Participants said that the administrative arrangements surrounding agency bargaining have created additional complexities and further work for personnel areas.
• Specific areas in this regard include:
  - The need for all transactions affecting pay to be expressed as base pay plus agency productivity pay, which requires at least two processes (and often more - eg in HDA situations). Personnel staff have estimated an overall increase of 25% in transactions (and therefore an increased cost), all of which have to be generated manually. They also noted initial instances of over- and under-payments due to a poor understanding of what was required.
  - The interaction between agency productivity pay and foldback increases
  - Different dates and arrangements for Senior Officers and ASO's.
  - The need to administer entitlements retrospectively creates difficulties when the person has already left the organisation.
  - Problems working out leave accruals when people transfer between agencies with different entitlements.
  - Difficulties with administering 48/52 schemes, carers' leave.
  - A massive increase in enquiries (at least initially) - at least one medium-sized agency had to take a person off-line just to handle enquiries.
• People considered the question of a single public service as opposed to separate agencies with different conditions of service to be fundamental.
• The view was put that we have hung onto the concept of a single service, but we no longer have a separate service as such and this has been coming for some time - you can't have it both ways - if we continue to diverge, we need to recognise that differences and perceived inconsistencies will emerge.
• Participants also noted the MTIA arrangements, which allow member organisations to negotiate changes at an enterprise level within an overall framework.
• Participants put the view strongly that the downstream effects of implementing various changes should be taken more into account when they are being negotiated.
• The point was made several times that agency-specific conditions of service will inevitably result in higher costs in personnel areas if the level of complexity is not addressed. Discussions with HR system administrators have also suggested that there can also be significant system costs associated with effecting the necessary system changes. These additional costs should be taken into account before the event, not after.
• A particularly telling observation was made by a participant from a GBE, who noted that particular conditions negotiated in an earlier enterprise agreement are now in the process of being re-negotiated to fit the constraints imposed by the agency's HR system.

Other areas of complexity

"Three years ago an ASO5 didn't have to do any salaries or conditions work - now they have to"
ASO5 Personnel Officer

• Participants referred to these specific functions as being either already complex, or having increased in complexity:
• Discretionary Leave (eg special leave). Too many types of discretionary leave (at last count, 48), with rules for their application which as often as not seem to require the advice or intervention of personnel areas. The basic premise is perceived to be that we don't trust people in matters of attendance - so we have rules which seek to minimise losses from the small proportion of people who might abuse the system. This has the effect of penalising those staff who are hard-working, who are then confronted with an inflexible set of rules which may not fit their circumstances. Line managers say they will sometimes exercise discretion to overcome some of the complexity in the system (eg by unofficially giving staff time off if there is a strong genuine case). Participants questioned why there couldn't be just one type of discretionary leave?
• Allowances. A number of agencies put the view that existing allowance structures can be particularly resource intensive - terms and conditions for recurrent allowances with small dollar values (eg cleaner receives 90c/day if cleaning toilets more than 75% of the time, but this requires an adjustment if the staff member goes on sick leave); or where the cost of paying the allowance is far greater than the amount of the allowance itself. The cost of administering remote area entitlements is also seen as significant - these include Remote Localities Fares; District Allowance; Compassionate Fares; Remote Locality Leave; Taxation Zone Rebates; and additional costs associated with uplift, the requirement to use vehicles etc. The view was expressed that there should be scope to rationalise these. There was strong support for the incorporation of various allowances into base rates of pay, based on some consideration of the cost of their administration.
• Overtime administration, where the issue is perhaps less one of complexity than the processes and cost of administration (approval/certification processes, meal allowances etc).
• Long Service Leave. The provisions for Long Service Leave require the recognition of periods of prior service and the manual recalculation of balances whenever leave is applied for or taken. Should be able to be handled automatically.
• Recreation Leave. Why do we pay leave bonuses the way we do - why not incorporate into base salaries? Different deeming dates flowing from agency bargaining are also perceived to have the potential to create difficulties in the future.
• Sick leave. The rules for anticipation of sick leave credits and conversion of half-pay sick leave to full-pay vary depending on length of service. Why not 3 weeks full-pay, as some agencies have already agreed? What happens on transfer between agencies with different provisions in this area?
• Part-time Working Arrangements. People agreed that while part-time work is a worthwhile initiative, the way we administer it is expensive. The current provisions are seen to be particularly time-consuming and unnecessarily complex. All processing has to be done manually, as nothing has been effectively automated. Considerations include:
  - Establishment arrangements: Part-time work is position based, not person-based; there is a need to create new or parallel positions, and amend position details whenever part-time hours vary.
  - Calculation and accrual of leave (recreation leave in particular) - recreation leave is calculated on accumulated leave based on previous hours (which can change regularly), must be used in order of accrual, and must be converted to current hours. Why not a bank of accrued hours?
  - Interactions with the DoF payroll system - superannuation needs to be back-adjusted; separate codes affecting overtime and HDA (eg when someone moves from part-time to full-time on HDA)
  - Superannuation arrangements. Super contributions for part-timers need to be calculated manually to reflect changes in salary levels.
  - A part-time worker's hours may change, but there can be a communication gap between the line area and personnel resulting in an over- or under-payment. There was some agreement that staff should be required to agree to a fixed period on fixed terms, and stick to this arrangement - it's open slather now. There was also some agreement that the award is vague, and a suggestion that a 008 number be set up to handle enquiries. Participants put the view that 3% part-time workers cause up to 15% of conditions work. As one personnel officer put it - I'm dreading the day home-based work gets off the ground....
• Calculation of increments on HDA. HR systems can't cope with the current rules for calculating increments on HDA (1 in 2 etc). Still done manually, which can take some hours (one participant provided a specific example of a situation which took over a day to calculate). There was also some questioning of the value of increments generally - why have them at all?
• Calculation of tax on separation. Tax on final entitlements varies according to changes in taxation legislation - an indication of complexity is the separate course run by POP. All needs to be calculated manually (although several agencies have developed spread-sheets). Several participants suggested that tax should be applied at a flat rate on separation, with the responsibility for sorting out actual tax obligations resting with the officer's accountant and the ATO.
• Superannuation. There is now a considerable variety of super schemes (eg pre-76, 76, 90, AGEST, CSS, PSS, and various productivity and roll-over funds), as well as the requirement to administer the employer component. Administration of super for temporary staff and shift workers can be a particular problem. Staff are generally becoming more aware of superannuation, and personnel staff are increasingly being asked to field queries and provide advice (which they usually refer to the appropriate authority). ComSuper is helpful, but the silence from AGEST is "deafening". The view was put that ComSuper needs to provide concise guidelines on APS superannuation conditions and entitlements and be more pro-active in its approach to agency needs. Personnel staff find out what the requirements are now primarily by networking.
• Compensation. All has to be calculated manually. There was also some criticism of communication between Comcare and agencies, and difficulties with payment arrangements.
• Service-wide HR policies (eg PAT's; CBT; EEO; FBT on HR benefits) are all time-consuming and are an additional overlay in the APS which is generally lacking in the private sector. Agencies aren't funded to take on these extra responsibilities, and the rules can act as a disincentive to their implementation. Small agencies in particular pointed to these requirements as being a real challenge just to devote the necessary time to understanding them, let alone to their implementation.
• Participants said that the complexity and diversity of personnel terms and conditions are compounded by the lack of consolidated information to support decision-making, and the inability of current HR systems to effectively automate many personnel processes.
• Participants at all levels noted the diversity of legislation and sources of information to support decision-making by both personnel areas and line managers, and the lack of a single consolidated easy-to-use reference source (this issue is covered separately).
• Enquiries on personnel-related matters are a major part of the overall workload - the time spent on responding to queries was estimated to be anywhere between 15% and 33%. People moving between agencies now encounter different conditions which can create a perception of inconsistency (eg 48/52 to non-48/52). The presence of personnel-related information on ACT Government pay-slips (eg leave balances) was noted and seen as a useful innovation to reduce the number of enquiries.
• The quality and availability of advice from central agencies came in for some criticism. The roles and responsibilities of the central agencies aren't clear to HR staff, and there is a perceived need for a functional directory of central agencies. A number of participants put the view that advice from central agencies is sometimes incorrect or inconsistent, and there is often a reluctance to put it in writing. Agencies look for authoritative advice, particularly to explain the basis for a decision to a disgruntled staff member or manager. The view was put more than once that there is an argument for re-centralising responsibility for providing advice on personnel matters. The suggestion was made that rotations between central and line agencies should be actively encouraged to broaden individual perspectives.
• Regional staff put the view that one of the problems with devolution is that advice from central agencies doesn't always get out past their own central offices, who don't necessarily see it as their role to supply outlying areas with advice from central agencies.
• HR systems are widely perceived to be unable to keep up with the pace of change. Many processes which should be able to be automated still have to be carried out manually, maintaining the emphasis on processing in personnel areas. Agency bargaining has had a particular impact in this regard. This issue is also covered separately in more detail.
• A number of participants noted the changing demographics of the Australian workforce - the trend towards part-time work and more temporary or casual employment. They pointed out that under the current set of rules, these are the most time-consuming areas of personnel administration, and in the absence of any changes in the way they're administered workloads will probably continue to increase in personnel areas over time.
• The view was put that workforce requirements are changing - often jobs are only required for a limited period, and there should be more scope for flexibility, eg use of temporary staff. The concept of job ownership may not always be appropriate.
• Many participants said there should be scope to address some of the issues driving costs and complexity (allowances, overtime, and short periods of HDA in particular) by way of rolled-up salaries, as in some public and private sector organisations. This is the direction for the future. However, there would have to be mechanisms to cope with situations such as regional offices, where people can get substantial loadings for shift arrangements, and the uneven spread of overtime.

Focus Group Comments - People Management Issues

"Are we managing people, or are we managing HR rules?"
HR Manager

• If there was a single common theme running throughout the focus group discussions, it was that of people management and the perceived role of HR areas in supporting managers. People consistently put the view that an inordinate amount of time is spent at all levels on managing the processes, rather than helping managers achieve organisational outcomes.
• A culture of litigation is perceived to exist in the APS - staff are generally aware of their rights, and under the current rules are provided with a variety of avenues to challenge decisions they don't like. Managers spend their time concentrating on navigating the processes, instead of deciding the key issues. The current role of the HR area in these circumstances is to help managers with the processes where necessary - providing advice, and then exercising a delegation where this is appropriate.
• There is a perception that for merit selection, performance management and grievance resolution, the processes have taken over. They're perceived to be heavily weighted in favour of individual rights, at the expense of responsibility to the organisation. There are too many avenues of appeal, although there was acknowledgement that implementation of some of the recommendations of the McLeod Review of the Public Service Act should have a positive impact in this regard.
• Senior Executives and line managers put the view that in principle, they should be able to make the key decisions on staffing matters within their area of responsibility.
• This would normally include the discretion to make decisions on selections (promotions, temporary transfer), appointments of temporary staff (there was some agreement that there are separate issues for permanent staff), HDA, entitlements/allowances, and all leave.
• This would also include having the appropriate delegations to make the decisions - and the responsibility of carrying the can if a poor decision is made. The observation was made that wherever a particular delegation lies outside the work area, there will always be a large volume of paper in the system and the potential for communication breakdown.
• Managers want the rules to be simplified, and provided in a readily-accessible and user-friendly form.
• Managers want flexibility - they want to be able to make the key decisions within guiding principles, rather than having to wrestle with a set of complex and prescriptive rules. There should be scope for setting broad parameters within which managers have to operate. The view was put that people management starts and ends with managers, not personnel - the issue is basically one of common sense and managers shouldn't need to be personnel experts.
• HR managers were divided on the need for prescriptive rules as opposed to guiding principles - there is doubt on the part of some HR managers as to whether line managers could effectively manage the more complex people issues without a prescriptive set of rules (and under the current rules, a fair degree of reluctance on the part of line managers themselves to take prime responsibility). A number of participants noted that inconsistencies, particularly within an agency, are a major source of grievances. A balance needs to be struck between the need for flexibility and overly prescriptive rules.
• Participants said that managers need to be equipped with the necessary skills and information to be able to make the right decisions, together with access to a source of expert advice. Personnel processes and support mechanisms should be geared to supporting managers, rather than making the key decisions for them.
• There was general concurrence that line managers' skills are critical where personnel functions have been devolved. Management decisions are compared within and between agencies; devolution places more responsibility on line managers to get the people issues right. There is a widespread concern that one of the effects of both decentralisation and devolution is a fragmentation of personnel management expertise. Managers often rely on support staff to provide expert advice, but they often don't have the depth of experience in personnel matters.
• Participants noted that many managers are neither interested nor skilled in people management. They observed that when the going gets tough, managers have a tendency to pass the problem to the HR area to fix it for them.
• Managers tend to put off the harder people management responsibilities, including counselling on attendance or performance, dealing with difficult probation cases, and eventually biting the bullet in cases of continuing poor performance - often because they perceive the system doesn't support them in taking a stronger line.
• Many of these problems could be avoided in the first place if the managers concerned had better people management skills and a better understanding of the personnel management requirements in the particular circumstances confronting them. Several people noted that even where managers do have a particular delegation, they still send the more difficult matters to personnel to sign.
• People noted that many performance problems can be traced back to the probationary period, and could have been avoided if the issues had been managed properly at that time. Managers are inclined to raise problems at the end of the probationary period.
• Participants were divided on whether line areas should be primarily responsible for addressing performance issues for staff on probation. On the one hand, managers should be responsible and accountable for managing the performance of staff under their control. On the other hand, when new staff move between areas during their probationary period their performance may vary, and personnel areas may be better placed to address the overall level of performance and attendance patterns. Managers may also not want to take responsibility for probationers.
• The process to annul was considered by one group of participants to be a nightmare - supervisors lack the necessary skills to handle difficulties, standards (output, attendance, teamwork etc) are subjective and can vary between offices, but unions insist on common standards.
• There was a general consensus that we need better processes to trap potential performance problems early, and that the processes could be improved if tenure was more open to question during the probationary period.
• Participants said that for managers to be able to take greater responsibility, they need to see human resource management as a fundamental part of their role.
• There was strong agreement that the existing culture promotes and rewards managers according to their abilities and expertise in particular functional areas, with very little attention given to their ability to manage people. Existing rewards and sanctions generally give little more than lip service to people management skills; if managers do get things wrong, life goes on more or less unchanged.
• Participants perceive that in the private sector, line managers have the authority and are accountable for managing people issues within their control. In the public sector, there's a perception that there's this greater issue of public accountability which somehow seems to over-ride the accountability of line managers for people management decisions.
  A culture of absolute equity and the resulting degree of complexity seems to require that the delegations and responsibility remain with the experts in personnel.
• Participants suggested a range of possible solutions to the problem of getting managers to take greater responsibility for people management issues. These could include:
  - A greater emphasis on people (and other resource) management skills in selections for management positions
  - A greater emphasis on people (and other resource) management abilities in the performance appraisal process, including a direct link with performance-based pay
  - Other rewards/sanctions within the organisation to be consistent with this (eg selection for HDA, withdrawal of delegations, possible movement within a band for SES)
  - Managers to receive adequate training as a pre-condition to the devolution of personnel functions, covering guidance on the relevant conditions of service (which may vary between agencies), their particular responsibilities, and where to get help if things go wrong
  - In the event of an appeal, managers to carry prime responsibility for their decision by having to develop their response and front the appeal forum themselves
  - Costing personnel services to line areas (DAS and those other agencies who provide out-sourced personnel services already do this)
  - Demonstrating responsibility - for example, by analysing the costs of stress cases and attributing to line areas

Focus Group Comments - Recruitment

• Most focus groups wanted to talk about recruitment processes, and discussion on this topic completely dominated a few of them. People agreed unanimously with the principle of selection on merit, but also considered that the selection process is a prime example of an over-riding emphasis on process.
• People were virtually unanimous in the view that the selection process is driven by the threat of appeals, rather than selection of the best person for the job. The process is open to external scrutiny, which puts an emphasis on the need to justify both the decision and the process itself in view of its legal nature. The onus is widely perceived to be on the organisation to prove its decision was right and its process beyond reproach, rather than on the appellant to prove that the decision was wrong.
• As a result, the process is seen to be complex enough to warrant expert personnel advice and/or involvement. There is some reluctance to delegate decision-making in this area, and for line areas to accept the delegation, without active hand-holding on the part of the HR area. Most of the effort from the HR area focusses on gate-keeping - ensuring the process is right, tracking progress, and exercising the formal delegation.
• The write-ups are extensive (mountains of paper), which is time-consuming and in some areas can represent a significant challenge and lead to delays. Several agencies routinely include someone from the recruitment area on the panel to ensure the process is correct and to handle the write-up, and this is perceived to be useful in minimising delays within these organisations. One organisation delays the detailed write-up until there is a need to provide papers in an appeal situation.
• There was some discussion about what is really required by way of write-up. The view was put that we should be getting back to first principles - the write-up should make it obvious why someone got the job, and should be restricted to whatever is required to sustain the decision. All that should be needed is the differences (ie comparatives) against the selection criteria for the main players. The view was put that this information should be freely available to applicants before the appeals process (although the privacy implications were noted).
• A participant from the MPRA emphasised that the selection process is primarily about core values - picking the best person, not the process - and the MPRA tries to focus on this. Another MPRA participant (in a different focus group) put the view that agencies tend to bring much of the problems on themselves; they develop complex processes which selection committees are obliged to follow, but people respond by looking for ways to get around them.
• The current appeal process encourages people to have two goes, and some participants agreed that this is indeed the prevailing culture in their agencies. Often, appeals are disguised grievances about the process, or the result of poor people management, rather than a genuine appeal against the outcome.
• Participants put the view strongly that if we're looking at recruitment, we should start by questioning the effectiveness of the selection process - does it really select the best person for the job? Many of them said that the existing process designed to apply the merit principle is flawed in a number of respects. They made the following observations:
• The need to consider excess staff separately is seen to contradict the merit principle, and one person put the view that the concept of succession planning as outlined in the PSC's HRM Framework also seems to be something of a contradiction.
• Selection committees aren't experts in selection techniques. There's a need for expertise in interviewing, and a perception that these skills are generally lacking in the APS. The view of some HR people is that they may be better able to pick when a person is uncomfortable or a poor interviewee.
• Applications are only useful in shortlisting for interview. There is an increasing use of professionally-prepared or ghost-written resumes, and applications aren't considered to be much value in assessing relative merit.
• Interviews are generally seen to be the prime determinant of selection - but many people expressed the view that interview performance is no real indicator of performance on the job. Some people will cram for an interview and may be able to demonstrate a level of knowledge that's not really there. Some people have the gift of the gab. Others find the whole interview process stressful, and some may have difficulties with interviews for cultural reasons. The comparison was drawn between public service interviews, which seem to be about passing a test, and the private sector, where abilities and aptitudes are tested in other ways and the interview is more about assessing whether or not the applicant fits the organisation. We need to find ways to minimise the trauma of the public service interview.
• Referee reports are perceived to be of questionable value. The willingness of referees to provide frank and useful comment is compromised by the threat of disclosure. All written referee reports these days are glowing and prove nothing (although this can sometimes back-fire - the observation was made that referee reports are legal documents in the AIRC, and grievances can result if a later management decision appears to contradict earlier referee comments).
  - Verbal reports are more useful as it's harder to lie verbally. The best predictor of efficiency is seen to be current performance, and panels should be checking up in whatever way is necessary. The view was also put that referee reports shouldn't be required for people rated unsuitable at interview, but people waste time chasing them up anyway.
• If the best person isn't a desirable proposition for financial reasons (they're external to the organisation; or they're interstate and there are travel and accommodation considerations), the process either stops dead at that point with no outcome but at considerable cost, or the order of merit is manipulated to accord with financial reality.
• The view was widely expressed that if someone wants a particular person, they'll write up the selection accordingly. Who you want might be a function of who best fits the team (personality, balance of skills etc), and this may well vary from time to time. A considerable number of people said that selections are often made by gut feeling, and the report worded to reflect the desired outcome.
• The observation was also made that we have a restricted view of merit with respect to base grade recruitment. Merit ought to be about the skills the organisation needs, not a restricted view based on Commonwealth Selection Test (CST) literacy and numeracy skills. This should include people skills and attitudes. The view was put that the base grade selection process is bewildering and needs an overhaul - Why do we have to test 20,000 people a year for jobs that don't exist?; Why do we select rocket scientists for photocopying and faxing jobs?.
• A number of people put the view that the merit principle ought to be seen in the context of value to the organisation. They thought there should be a better balance between individual and organisational needs. They queried whether the existing processes and requirements provide best value for the public dollar, and made these points:
• The notion of merit in this context would include some concept of whole of life value, similar to purchasing principles. There should be scope to weigh up the cost of, say, transferring the No 1 applicant from interstate against the cost of, say, training the No 2 applicant, and then making a decision based on best overall value to the organisation rather than having to select the best applicant regardless of cost. Public interest should recognise dollar realities.
• Similarly, people acting in positions for long periods ought to be able to be automatically promoted without having to go through a lengthy selection process. Where a person has been selected on merit for long-term acting and is a proven performer, the cost of running another selection process should be balanced against the likelihood that a better applicant will emerge who will be worth that cost. Many selections appear to be a formality.
• Circumstances exist where the requirement to advertise should be limited - for example, when the need is for project-based staff with specialist skills for finite periods.
• Participants noted other costs incurred in merit selection processes, such as:
  - The cost of making all APS recruitment processes totally open (eg the need to gazette all appointments).
  - The perceived need to re-advertise and restart the whole process if a selection isn't made within 6 months. At least one large agency goes through a regular selection process to select an order of merit for all levels up to ASO 6 - we go through this again and again - why not use it for 12 months? Joint Selection Committee (JSC) orders of merit last for 12 months.
  - The need to separately advertise a new Senior Officer position with the same duty statement and selection criteria as a position for which a selection process has already been carried out recently (the previous selection process can be used for a new vacancy at ASO 1-6 or equivalent levels if it was within the 6-month limit - but not for Senior Officers).
• The observation was made that the existing selection process isn't valued by line areas. Participants generally attributed delays in the selection process to line areas, who seem to find difficulties with the requirements of the process (particularly documentation) and who respond by delaying it or by taking on temporary staff to meet their requirements.
• The role of the recruitment area in the selection process is generally that of time-keeper - prompting the line area to get on with the process. A couple of agencies noted they've had some success in reducing delays in line areas by reporting progress on recruitment regularly to senior management (amazing results!).
• The view was put that the process should be designed more from the perspective of the line manager. The view was put that line managers are usually less interested in legislative requirements, referees' comments, access and equity and other HR considerations than they are in just getting a bum on a seat. Managers want practical advice on what options are available to them in recruitment situations - for example, whether they can pay at the top of the range to attract the right applicant; or advice that if the No 1 choice is unavailable the delegate can choose to re-advertise but noting that this has led to grievances in the past.

Other considerations

• People made a number of other observations on various aspects of the recruitment process:
• There was considerable discussion on the role of the delegate in selection processes. Delegation patterns between agencies vary from line managers to personnel areas, but are conservative in most agencies - the delegation remains with the personnel area or senior line staff. In some agencies the delegate (who may be external to the line area) has a role in determining whether or not the position should be filled at all (eg for financial reasons).
  People were divided in their views about where the delegation should be. On the one hand, participants said that the delegation should rest with the area making the decision, and perhaps the delegate should be on the panel to make a direct decision. This would have the effect of building quality into the decision-making process right from the start, and would be consistent with other government decision-making processes. On the other hand, the view was expressed that the delegate should be independent of the process to ensure that the correct processes have been followed and the correct decision made.
  There was broad agreement that delegations should depend on effective training beforehand. Several participants put the view that delegations should be linked to suitably competent individuals (in a formal sense), rather than positions.
  Most participants said the delegate focusses more on the process than the outcome. There is generally no accountability for decisions - if a review process overturns a particular decision, the decision-maker (ie the delegate) is not seen to be accountable, nor are there any sanctions to ensure more effective decision-making in future. Quality assurance is reactive - we often disagree with the process, but rarely with the recommendations.
• The view was put on several occasions that more attention should be paid to selection criteria - keeping them simple, selecting them with care, selecting the minimum number possible, and weighting them appropriately beforehand.
• Concern was expressed regarding existing structures and the inability to transfer readily between streams (eg GSO or TO to ASO). Structures should line up more closely. Structural factors can contribute significantly to the costs of recruitment in some organisations.
• There was some agreement that there is a role for performance appraisal in the selection process. There was considerable discussion about the value of performance appraisal at all levels, and its possible use in the increment process also. Representatives from Defence noted that military appraisals are open, and are routinely used as part of the military selection process.
  Participants also noted the scope for consideration and use of formal competencies in selections.
• A number of people noted problems when a person is selected who turns out to be less than perfect for the job. In this context, unsuitability has far more acceptable connotations than inefficiency, which may not be appropriate. A few people thought there should be some form of probation on promotion. There is a perception that agencies already get around the problem by acting people first to test their suitability and then promoting them if they're satisfactory. People noted some agencies routinely select orders of merit for acting, then fill the jobs permanently later on.
• Several agencies use Joint Selection Committees (JSCs) to circumvent many of the difficulties, but noted the costs in this regard ($700/day), and a perceived loss of control over the process. A number of people thought JSC's have been a positive step - staff feel they've had a fair hearing, and grievances have dropped off. Several participants put the view that there should be scope to use JSC's for fewer than 5 positions. The view was also put that the requirement for a union representative and an MPRA representative was unnecessarily restrictive - it should be possible to agree on other suitable independent bodies (eg from a different agency).
  A participant from the MPRA put the view that JSC's are an example of better practice in recruitment processes, stating that Australia-wide, the average JSC is for 37 vacancies, the average number of applicants is 152, and the average time to complete is 5.2 weeks. The process is predicated on being able to be written up in coded or non-literary style, and it can already be used for less than 5 vacancies by negotiation.
• There appears to be an increase in the use of scribes as a way of speeding up the process, but again at some cost - as well as direct costs (usually around $100/hour), agencies are responsible for PAYE tax arrangements, superannuation and contract processes. One organisation has apparently levied functional areas to fund an internal scribe position, but the need to rotate people through any such position to minimise the risk of over-exposure within the organisation was noted. There appears to be limited use of outside recruitment consultants.
• Several people observed that the recruitment process is often used as a proxy for performance management.
• In the absence of feedback, people apply to see how they're going, or for experience. On the other hand, managers go through the process of interviewing all internal applicants out of courtesy, and then feel duty-bound to provide detailed write-ups regardless of how competitive they may have been. Appeals and grievances can occur when the first time someone hears about a problem is as a result of an unsuccessful selection process.

Alternative approaches to recruitment

• A number of people in the focus groups drew comparisons between APS merit selection processes and alternative private sector and APS selection processes. They made the following observations:
• In the private sector, skills and aptitude are tested in different ways to the APS. The observation was made that private sector recruitment seems to take greater account of motivation, team-work, initiative and attitude. Attitude plus base level skills is a more potent combination than skills alone. The trend is to put people in situations and see how they respond (this also happens in some APS selections). People commonly go through a series of interviews, but not necessarily by selection committees. In contrast, APS recruitment processes commonly test knowledge rather than skills by asking questions at a single interview and then getting referee comments, and aptitude may not be tested at all.
• In Australia Post, all applicants for base level jobs are tested for attitude; tests are administered by the CES, and have the approval of the relevant unions. As an example, they use a method for potential counter staff which tests attitudes by means of a video posing particular situations to which applicants have to respond (but where there are no right answers). If they pass this test, they then move on to the interview stage, and if they're deemed to be suitable they then undertake skills testing. The ANZ Bank uses the same methodology for their counter staff; they're now hiring people whose attitude is more compatible with the organisation's philosophies, and they're also using it to promote people. Turnover has apparently reduced significantly.
• One of the Parliamentary departments is looking at involving work teams in the selection of their supervisor by way of an additional interview with the team (eg an interactive forum, set questions, properly scribed), but notes possible difficulties with external applicants as opposed to internal ones, and problems where the panel might prefer one applicant and the team another. Optus apparently routinely involves people at lower levels in the organisation in selection processes.
• DSS has been trialling a quite different method of selection - the PAR selection process (Performance Assessed by Referee), which is based on the premise that the most accurate predictor of future performance is current performance. The process minimises the requirement to put together a detailed application, and may or may not involve interviews. Selection is based on quite detailed assessment of each applicant's performance by at least two referees, who must collaborate and agree on a range of individual ratings which are then moderated by senior management. The process is still under trial.
• Joint Selection Committees in at least one large agency have reached their decisions without having to interview all applicants. Selection decisions have been made by assessing each applicant against the selection criteria and grouping them into a number of groups: suitable for promotion, unsuitable, and marginal; interviews are then carried out at the margin.

  Note: The purpose in highlighting some of the differences in public and private sector recruitment practices and some of the different ways of handling selections in the APS is not to suggest that these are necessarily better practice. This has yet to be shown. However, they illustrate that there may be other ways of assessing merit which may also accord with APS merit selection principles. Restricting our thinking to the current model of selection is limiting in terms of finding better ways to select the best person and get best value for Government funds.

Adding value to the existing selection process

• Focus group participants from HR areas identified a number of ways in which they thought value could be added to the existing selection process.
• Within agencies, participants from HR areas believe they could add value by adopting some or all of these suggestions:
  Being pro-active when vacancies occur - encouraging the advertising of expected vacancies as a way of speeding things up, ensuring that advice is provided on the overall process and selection committee members properly trained. One agency insists on chairpersons attending a chairperson's course and other panel members attending a more general course on selection. Other agencies also have in-house selection training, although not necessarily mandatory.
  Seeing things from the manager's perspective - within the merit principle, being a source of expert advice on options for managers to meet their needs, and advice on matters of detail such as interstate transfer allowances.
  Involving themselves in the interview process and handling the write-up (several agencies do this already and have reported positive benefits in terms of quality of report and reduced filling times).
  There is also scope for taking a pro-active approach in helping to improve the writing skills of members of the panel and participants in some areas.
• MPRA participants put the view that there is scope for their organisation to add value by taking a more pro-active role in agency selection processes, but there would be costs. They currently get calls when people have concerns but don't want to lodge grievances, but can't take direct action until a process is formally initiated. Their role could include conciliation/mediation as well as participation on JSC's. They could also perform an audit function of selection practices, policies and guidelines (they are currently already doing this with at least one agency).

Temporary employment

• People also discussed the use of temporary employment in the APS, and several put the view that there's a need to look at the whole process of short-term employment.
• A number of participants said that the use of temporary staff is increasing in their agency for one reason or another (Note: This is probably specific to their agency - recent figures suggest that temporary employment as a percentage of overall staff varies considerably between agencies, but has been declining in the APS as a whole).
• Agencies employ many temporary staff who wouldn't be competitive under normal entry processes, but they're keen and they can do the work. Agencies get a chance to look at them, and they get the chance to compete for jobs on merit after 6 months. This is often preferable to taking someone off the DEET order of merit. Other lists (excess officers) take precedence over the order of merit; and agencies can be required to take these people first - we get told who we're getting. There is therefore some reluctance to recruit at the ASO 1 level.
• Employment agencies such as Templine aren't always the best option in view of the cost ($500/head), and because recruitment through such agencies doesn't always provide the best fit for the job. If an APS organisation decides to set up its own temporary employment register, jobs have to be re-advertised every 6 months. This is considered to be a waste of time - why not 12 months?
• Those agencies who do use significant numbers of temporary staff noted increasing complexities around superannuation and the cost of calculating final monies (which can take a couple of hours), and communication difficulties with line areas about when staff cease or are extended. The practice of ceasing them just prior to the 12-month point and then re-starting them was also noted.

Focus Group Comments - Grievances, Inefficiency and Performance Management

• A number of participants said that too much time is spent on the processes associated with inefficiency and under-performance, grievances, investigations, appeals, stress cases, privacy breaches, and so on. People made these observations:
• There are too many avenues of appeal. There's a need to satisfy a variety of external sources as to the legality of both decisions and processes - people can (and do) pursue appeals through a number of channels, which include Reg 83; the MPRA; the Ombudsman; HREOC; AAT. People are often skilled at clouding the processes, and some are always looking for ways to beat the system. Participants acknowledged that the issue has already been picked up as part of the McLeod review of the Public Service Act.
• With respect to grievances, a number of people said the processes aren't so much the problem as the reluctance of line managers to assume responsibility for effective people management. Problems arise from the way managers interpret rules on eg HDA, access to training; Studybank, movements within the office; and so on. A representative from one large agency said most grievances come from selections (particularly selections for temporary staff for gazetted jobs, where there is no avenue of appeal), and rules for excess staff and redeployment.
• Grievances are often the result of general unhappiness with the level of communication on decisions affecting staff adversely. Several people said grievances may arise more from an accumulation of concerns, rather than a single issue, which tends to re-inforce the need for more effective people management. There is a view that lower-level staff have a greater tendency to put in grievances - the more you educate them about the provisions, the more they tend to use them.
• The level of delegations for grievance processes varies between agencies. Some have devolved them to line areas, while others have either kept them in or are pulling them back to personnel areas. A POP representative observed that whenever they run management training courses on grievances, discipline and inefficiency they get personnel managers, not line managers.
• People still perceive the management of inefficiency and under-performance to be a problem, despite the initiatives contained in the 1992 APS Agreement. With increasing dollar pressures, it's no longer possible to ignore under-performers. However, managers are still reluctant to bite the bullet.
• Managers perceive the system still doesn't support them in cases of inefficiency or underperformance. They may defer making any decision, which only delays the issue and makes matters worse, before eventually passing it to the HR area to resolve the matter. The view was put that performance management is a bit tick & flick - until you get poor performance, which you then have to quantify in some way.
• Several people said there should be some easier process for situations where efficiency may or may not be questionable, but neither the organisation nor the individual want to stay together - a sort of no-fault divorce. Redundancy is often used as the vehicle to achieve an outcome in inefficiency situations, but this creates a perception within the organisation of reward for inefficiency. A number of people agreed that there should be greater scope for reduced tenure - eg contracts - with additional remuneration in lieu.
• Participants from small agencies noted the greater effect of internal shock waves created by difficulties in redeployment and inefficiency situations. There is a need to manage both the people and the process in terms of internal impact - corridor talk etc. The view was put that the existing processes and policies for redeployment and inefficiency have been designed for larger agencies. Small agency views have not adequately been taken into account in their development.
• The view was put that there can be a fine line between inefficiency and discipline - the example was given of an individual deemed to be unfit for work, but seemingly well able to continue with their second job. The processes, however, are completely different. Discipline seems to be a legal minefield, where everything has to be proved, with close attention to due process and even to the way the charges are written. Inefficiency at least puts some onus on the individual to perform. However, the outcomes in both situations are perceived to stand or fall on the process, rather than the merits of the particular case.
• Many participants believe that the processes associated with inefficiency and performance management are weighted heavily in favour of the individual - "we keep trying to fit people into the organisation when they clearly don't fit". People gave these examples of a perceived undue emphasis on individual rights:
• Failure to place any weight at all on past performance when assessing efficiency - the need to start with a blank slate and assess the individual for a continuous 3-month period. Frustration that this process can be derailed by a period of leave. A view that the 3-month period is artificial - people should be receiving feedback on an ongoing basis.
• Inconsistent advice from the PSC and MPRA - eg MPRA says the clock stops when the individual is on sick leave, the PSC says it doesn't. A view that the MPRA takes a softer line and is more likely to accept the word of the individual.
• Problems with informal counselling and whether counselling has or hasn't occurred, and difficulties in achieving an outcome because of technicalities in this area.
• The more or less automatic granting of increments, and the formal processes to defer.
• The linkages with stress - there is a view that everything can be hidden under the umbrella of stress. Frustration with Comcare, who take too long to react to stress-related claims, and who don't seem to appreciate the demonstration effect of individual cases. Difficulties with the definition of reasonable disciplinary action in the legislation.
• The need to: wait 4 weeks before pursuing forfeiture of office when someone doesn't bother to ring in; send advice and then make sure the individual receives the advice; and then wait a further 2 weeks before formal forfeiture - but if they come back for a day, it's all back to square one.

Focus Group Comments - Devolution and Centralisation

• Participants consider that there is still a fair bit of confusion around concerning devolution and decentralisation. People tend to discuss them in the same breath, although they aren't the same thing.
• The view was put that the administrative savings associated with decentralisation are often illusory. Previously centralised resources are shifted to line areas to support the decentralised functions, and there can also be problems with double-handling - eg with financial/staffing statistics. There is a technology cost, particularly in the regions. Any decision to decentralise a particular function should take into account the economies of scale that are usually achieved by centralised processing, as well as complexity - there's no point in devolving elements which are either complex or rare. There can also be a negative cost impact (particularly where there's uncertainty about the future) in that enquiries are directed to line areas rather than personnel (personnel staff estimate that anything up to a third of their time is spent fielding queries).
• An example of the general level of confusion is the widespread devolution of recruitment, where much of the work has been pushed out to line areas, but more often than not the formal delegation to approve the selection ends up remaining with personnel or senior management.
• Participants put the view that the decentralisation and devolution of various functions has resulted in a proliferation of admin support units (ASU's), and this has resulted in some de-skilling of central personnel areas. Bright staff are quickly snapped up by line areas, and move out of personnel administration over time. The experts are becoming thin on the ground.
• A participant from the MPRA observed that they now get all sorts of people ringing up - people who may have been referred to personnel but who can't get authoritative advice; this is a service personnel areas or central agencies should be providing.
• People said that where there have been problems with devolution, it has usually been because some of the necessary support structures weren't in place. Education of line managers is critical.
• There is a need for better management training, and skilled support from personnel areas. There may be no real change in managerial understanding or behaviour, as they may now have ASO's who do it all for them. Quite a few people observed that many managers don't want responsibility for personnel matters - personnel problems are for personnel to solve - and these people are probably not likely to change.
• A representative from one large organisation identified the lack of effective training and support as a major cause of the failure of devolution in his organisation - people acquired functions with no idea what to do. Another large agency has taken the course of devolving different functions in different areas according to perceived need, desire and capacity.

Focus Group Comments - Improving the Effectiveness of Personnel Management

• Both HR participants and managers agreed that delivering and maintaining a high level of service to staff is fundamental to effective personnel services.
• Participants said there should be agreed service standards in personnel areas. This should include acceptable turnaround times, consistent advice and responsiveness to their clients. A number of participants said they believed their personnel area had improved its client focus - for example, one agency provides letters to staff detailing leave credits at 1 January, pre-retirement counselling etc. There should be feedback mechanisms in place to monitor the standard of service being delivered.
• Accuracy is also important - people agreed that there's a need to get things 100% right when you're dealing with people's pockets. Staff need to feel confident in their personnel area. Inaccuracies can lead to us and them attitudes.
• Several (non-personnel) people made the point that personnel staff are a committed group of people. They acknowledged the levels of responsibility, the skills and knowledge required, and how enterprising HR people have been as a group (for example the extent to which they have set up co-operative arrangements and developed both formal and informal networks).
• People at all levels - managers, personnel staff, and clients - also agreed that improving the effectiveness of personnel services means a fundamental shift in emphasis from interpreting conditions, processing entitlements, auditing processes and system tracking to supporting/enabling/empowering/advising line managers on people management issues.
• The view was put that the prevailing culture in the APS is that process is the key consideration, and the personnel infrastructure is geared to this. The focus in personnel areas seems to be more on outputs than outcomes. However, the emphasis is on mechanical processes like checking sums and the interpretation of rules. There seems to be considerably less emphasis on corporate direction, appreciating and anticipating client needs and expectations, and questioning the processes.
• There was widespread agreement at all levels that the focus should be more on adding value. The challenge is to shift mindsets so the emphasis is on supporting managers, not regulating outputs. The point was made that there is a connection between the perceived quality of service from the personnel area and the general level of morale in the organisation.
• A number of people said HR processes should be linked more effectively to other corporate goals and planning processes.
• Many managers tend to see HR as off to one side - paying people, regulating leave and conditions - and there is certainly a general perception amongst HR staff that what they do isn't valued by their organisation. Without explicit links to corporate goals, HR/personnel functions will always be off to one side. HR priorities should directly support corporate business plans; this would help the perception of HR adding value to the organisation.
• Several people said there should be a greater emphasis on strategic thinking in HR generally. A comparison was made between the specific direction of the Financial Management Improvement Program and the vague general direction of the HR function.
• Participants from both personnel and line areas agreed that to add value to personnel services, there's a need to look at the provision of these services from a user perspective.
• There is a need to build good working relationships with line areas. The point was made that effectiveness is about providing options, not hiding behind the rules. An example of effective support for line management was given for part-time work: there are legal and financial considerations for managers (eg compensation, resource management), and perhaps some nervousness on the part of managers who may not fully understand all the implications. When someone applies to go part-time, the manager, the individual and someone from the personnel area should sit down together to talk about the implications, with personnel suggesting ways in which some of the difficulties have been dealt with elsewhere.
• There should be more emphasis on simpler policies and processes to help managers manage. Managers should know what the main things are that are likely to impact on them, and policy-setting should focus on these core functions. They need a ready reference source of authoritative information on key personnel functions. There should be scope for setting broad parameters within which managers have to operate, rather than a set of detailed and prescriptive rules (eg on various types of discretionary leave).
• Effective HR systems need to be in place. Leave and HDA all require a massive amount of paper - these processes should all be automated (and in some agencies already are, with staff and managers already having access to remote entry facilities for various transactions).
• Adding value might also include:
  - providing a recruitment service which is focussed on helping managers get the best person into the job in the shortest possible time;
  - providing a staff development function which is consistent with corporate and personal goals;
  - facilitating the management of organisational and individual performance;
  - mediation/conflict resolution;
  - workforce planning, which would include providing better management reporting on salaries expenditure and future trends, staff turnover etc, and suggesting options to help managers meet their longer-term staffing needs;
  - facilitating industrial harmony; and
  - generally taking a pro-active approach with line areas.
• Participants said that to achieve a more effective level of service, we need to de-emphasise processing and develop a more sophisticated layer of personnel people. Personnel areas should be a centre of excellence that managers can rely on to help them solve their people management issues. People agreed that the following things were pre-requisites to achieving a better level of service:
• The rules and processes need to be simplified. Personnel areas won't be any better placed to offer a more pro-active service if they continue to spend the bulk of their time processing a variety of complex conditions of service. Managers won't be any more eager to take on responsibilities if they continue to be faced with complex requirements and processes. The rules have to be kept simple enough for managers to be able to understand and apply them.
• Line managers must be given the delegations and responsibility for managing people issues. They must assume full responsibility for processes and outcomes, including prime responsibility for fixing things up when they go wrong.
• Clear guidelines in plain English must be available at two levels: line managers, and personnel experts.
• HR systems should support the process. Managers aren't interested in processing. Automated systems should be available to handle processes, with the capability of management intervention and decision-making at appropriate levels, and an effective management information facility.
• Adequate training should be provided so managers have a better appreciation of basic people management principles, and a good understanding of the key rules and structures within which they have to operate.
• Managers will always need access to expert generalist HR advice to enable them to handle the more complex situations that might arise:
  - There should be a more pro-active/outreach approach by HR areas;
  - There is a need to build effective working relationships with client areas;
  - There is room to consider a Help Desk concept (Worksafe already has this);
  - HR areas need to market their skills - what they can do for the organisation; and
  - There is a need for credibility and consistent advice - line managers have to have confidence in the HR area.
• Standards of service from personnel areas are important and must be articulated:
  - Expectations are high - personnel areas need to be able to demonstrate value added;
  - There should be agreed performance indicators;
  - There should be some form of regular structured feedback from clients; and
  - DAS Support Services uses service agreements - DAS notes that charging for services means customers expect more.

Focus Group Comments - Small Agency Issues

• As part of the consultation process, two focus groups were run specifically for small agencies, and staff from various small agencies also took part in many of the other focus groups. Small agency participants put the view strongly that the public service overlay is not consistent with the principles of devolution and managing for results.
• They argued that there is a huge effort required just to come to grips with the requirements of EEO, ID, OH&S, Aboriginal employment strategies, privacy legislation, FOI, human rights legislation, admin law, access & equity/social justice, disability legislation, CBT, PAT arrangements, annual reporting, and so on. There was general agreement that the processes associated with these requirements have taken over - We're losing sight of what we're here for - the tail is wagging the dog. Complying with these requirements can determine how smaller agencies structure their HR resources and inhibit the extent to which they can provide more value-added services.
• Participants agreed that the many layers of legislation create avenues for people to challenge decisions, there is a reporting overload, and there is increased pressure from industrial quarters. This creates further problems for small agencies, who lack the critical mass to be able to pay due attention to all these requirements and do their jobs at the same time.
• Small agency representatives also highlighted most of the concerns expressed in other focus groups about the increasing level of complexity in personnel work and difficulties with many of the processes. As with other focus groups, participants agreed that the resource implications of implementing various Government policies should be taken more into account as these policies are being developed.
• There is a view that small agency concerns have not been given enough attention in developing agency bargaining policy in particular. Support at the working level is good, but more attention needs to be given to how to get the message across to senior management in small agencies.
• Small agency participants consider that the issues relating to corporate management, including human resource management, have now become so complex that networking limited to information sharing is now no longer adequate to meet their needs. They put the view that small agencies should consider co-operating more closely with each other to meet their needs, not only with respect to the provision of personnel services but also regarding the best way to meet their overall corporate management requirements.
• People agreed that joint participation and co-operation on complex matters requires co-operative processes at the working level, rather than the more senior level of participation in the existing small agencies network. Workplace bargaining has been the catalyst for bringing these issues to a head.
• The observation was made that portfolio co-operation doesn't always work, particularly when the portfolio agency is not well resourced. There was some discussion of the merits of existing arrangements like the ACT Small Agencies HRD Forum, joint middle management development programs, and similar state-based staff development networks. There was agreement that any future co-operative efforts would have to be self-funding - goodwill encourages takers, not givers, and agencies would have to make a commitment or investment for it to be successful. The view was put that central agencies should have a role in co-ordinating the initial establishment of any co-operative arrangements.
• Joint co-operation would depend on there being a critical mass of interested agencies, which may give rise to possible difficulties with a variety of conditions and increasing divergence. CEOs would need to be prepared to let go of some control.
• Although co-operative efforts between small agencies should be focussed on broader corporate issues, participants believe there is considerable scope for them to co-operate more closely in the provision of personnel services.
• Small agencies need access to a pool of experienced and knowledgable personnel practitioners or bank of knowledge, but they often lack the critical mass to retain skills in these areas. The problem of staff turnover in personnel areas is exacerbated in smaller agencies, where there's usually no career stream for personnel staff.
• Co-operation would have to be based on contemporary issues to be successful, with participation at the practitioner level - HR managers. Co-operation should be linked in some way with the development of strategic HR skills - perhaps through AIM, or aiming towards the recognition of formal APS HR competencies.
• The needs of small agencies in cities outside Canberra should be taken into account.
• Some of the things that could be addressed collectively include:
  - identification of all powers/delegations;
  - generic HR policies able to be tailored to meet individual agency needs eg LWOP and home-based work; and generic EEO and ID plans.
• There was some discussion of outsourcing personnel services, and a view that there's a need to distinguish between HR processes (which might be able to be outsourced) and the professional advice/corporate policy HR functions (which should be retained internally). There was some concern expressed, however, that outsourcing may lead to a poor understanding of personnel processes and their implications. A number of the smaller agencies already outsource their personnel services to either their own portfolio department or DAS Support Services.
• There is a perceived need for a better process to disseminate knowledge and policy on HR/personnel matters - perhaps similar to Comnet, but at a lower level (eg HR managers). There is also a need for a concise summary of information (as there is for all agencies, and for line managers - this is discussed below). Small agencies say they find most things out now by networking.

Focus Group Comments - The Support Infrastructure

Access to rules and information to support decision-making

• Participants at all levels pointed to the volume of legislation, awards, guidelines and circulars that both HR and line managers need to be aware of and refer to when making personnel-related decisions.
• Both personnel staff and line managers have to get across a great deal of information. Authorities for decision-making include the Public Service Act; various determinations; any relevant awards, in particular the General Conditions of Service Award; the Personnel Management Manuals (PMM's) which contain some determinations and more user-friendly interpretations of terms and conditions of service; various handbooks (eg Streamlining); other Acts including the IR Act, Maternity Leave, Compensation, Superannuation; various administrative circulars from the PSC, DIR, DoF, ATO and ComSuper; as well as internal policies on various personnel functions.
• There is no single place in which all of these references and authorities are located. Some of the reference sources are out of date, and it can be difficult to determine whether or not all the relevant information has been received. There can also be communication problems within agencies - not all policies find their way to local offices, and in the absence of policies from central areas, they have to be developed locally. Networking has become increasingly important in maintaining levels of knowledge on people management issues.
• Focus group participants identified the need for consolidated reference material at two levels: for HR/personnel people, and a simpler sub-set for line managers.
• Personnel people say they need a consolidated index to help them find their way around. There is a need for a clear and concise reference source for all conditions of service. A number of people put the view that continuing changes to the personnel environment will only serve to compound matters if this is not handled centrally.
• Reference sources should be in plain English - participants noted the need to update PMM's and provide simpler documentation on part-time work, as well as consolidated information on tax changes and superannuation suitable for personnel administration. Several people made the point that there is often a need to refer clients to an authority in personnel situations where the outcome is not to the client's liking.
• There was also a reference to the need for better access to information from ComSuper, and a suggestion that there may be value in providing access to a data base allowing basic queries.
• Managers and HR staff agreed that line managers need a single information base with easy access, covering basic information about those conditions of service most likely to affect them or their staff - something they can refer to first before contacting the experts in Personnel.
• A reference suitable for line managers should contain basic information and reference to a source of authority on:
  - all leave entitlements, processing arrangements and delegations;
  - HDA policies and processes;
  - selection policies and processes;
  - part-time and temporary employment provisions;
  - increments;
  - probation;
  - industrial relations;
  - redeployment;
  - basic superannuation information;
  - rights and obligations of staff;
  - EEO;
  - OH&S;
  - discipline; and
  - rehabilitation.
• A number of agencies have already produced such handbooks for managers and supervisors. An alternative suggestion is to implement some sort of help desk arrangement - already in use in a couple of agencies.
• The Commonwealth Managers' Toolbox, issued three times a year, is widely perceived to be not particularly user-friendly, and fails to meet the needs of either HR specialists or line managers with regard to personnel matters.
• Discussions with both personnel and non-personnel Toolbox users as well as the Toolbox's owners reveal that the Toolbox's shortcomings are well-recognised, and are perceived to be the lack of an index (you have to know where to look), out-of-date information, and little or no effective user training, despite the availability of training (at an additional cost) from the system owners. Although the Toolbox is issued with a User Guide, this is often not circulated to users.
• The system's owners are aware of user concerns, and are moving to address these by surveying users before going out to tender for a revised Toolbox shortly. The CD-ROM form is likely to continue for the foreseeable future before an eventual move to something like Internet.

Human Resource Management and Information Systems

• Participants at all levels expressed concern at the inability of existing HR systems to effectively automate particular provisions of service (calculation of increments, separation entitlements, and part-time work provisions were repeatedly mentioned), and to adapt quickly enough to changes. Agency bargaining has resulted in some degree of divergence between agencies' conditions of service, and the perceived inflexibility of existing systems is expected to be a source of continuing difficulties in the future.
• The view was put several times (by both users and system managers) that communications need to improve between system owners and system users. System owners should be more pro-active in anticipating changes and moving to adapt their systems earlier. This might mean better linkages with central agencies or other areas initiating changes. Similarly, agencies contemplating changes should be consulting earlier on the cost and implementation ramifications of these changes.
• Users of in-house systems are generally happier with the ability of their particular system to meet their needs than users of systems operating on a commercial basis. Those on commercially-based systems observed that priorities seem to be directed more towards getting more customers on the system than on meeting the changing needs of existing customers.
• Despite the perceived inability of systems to adapt quickly to changes and automate key processes, there is some diversity in the extent to which system capabilities are being used. In some instances the level of dissatisfaction may have more to do with how the systems are being used than a lack of functionality.
• Many participants put the view that there should be a single HR system service-wide - or at least a limited number of systems with the ability to talk to each other (ie with the ability to transfer key elements of data between systems). The idea of a single system or a single user interface was also seen to be attractive in terms of minimising the learning curves of personnel and other users.
• There is an increasing need to maintain or calculate information for external agencies, including superannuation supporting information, and additional calculations to meet accrual accounting requirements in accordance with Australian Accounting Standards (AAS) (calculation of LSL obligations at 5-year point; average sick leave usage and future likely liability; etc). Existing HR systems aren't designed to meet these needs.
• The issues relating to HR systems are complex, and any attempt to list the perceived shortcomings of each of the HR systems in use in the APS is beyond the scope of this report. System owners are generally well aware of user concerns and priorities. However, participants overall said HR systems should have the following characteristics and capabilities:
• The ability to adapt quickly to changes in the rules;
• The ability to automatically handle:
  - agency productivity pay;
  - part-time working arrangements, including leave accrual;
  - all other leave accrual including LSL, graduated return to work, 48/52;
  - shift arrangements;
  - calculation of increments;
  - calculation of separation entitlements, including tax and redundancy costs;
• The ability to carry out all calculations automatically and in accordance with audit requirements:
  - many participants noted the culture of checking all calculations in personnel areas, and said HR systems should be able to be relied on to do this totally for all functions covered;
• The ability to provide advance notice of probation, increments due, age retirement, review of positions;
• A user-friendly interface (graphical user interface, or GUI) similar to Windows:
  - including guidelines explaining the processes in simple language - people should know what the system is doing, and why;
• Ready accessibility by both staff and line management:
  - with suitable access codes to allow read-only access in accordance with privacy requirements and the need for adequate information to exercise a delegation;
  - staff members able to access pay details, leave balances, occupancy details, and make changes to personal details, banking arrangements etc;
  - with the ability to handle all HDA and leave functions from line areas without paper, but in such a way that allows for intervention where necessary by managers, delegates and HR staff at key points (eg by a series of prompts);
  - participants recognised the cost implications of these kinds of facilities;
• A sophisticated information and user-friendly reporting capacity accessible by line managers:
  - able to provide common data for service-wide responses, including taxation and superannuation reporting requirements;
  - able to generate standard letters, but with the ability for managers to customise;
• For agencies in a commercial environment or moving towards one:
  - the ability to combine commercial and personnel processing into a single system;
  - the ability to handle accrual accounting requirements in accordance with AAS;
• Ability to interface with other software:
  - financial management systems;
  - spreadsheets, for functions like workforce planning; and
• Better integration with the payroll system, including:
  - ability to delay cut-off right up to pay-day;
  - ability to deal with superannuation and compensation requirements for casual staff.
• Discussions with the system managers of the five HR systems covering some 95% of the APS suggest that in their view, HR systems are more or less keeping up with the pace of change. However, this is at the expense of automating other tasks such as processing for part-time staff, calculation of separation entitlements, and better management reporting facilities.
• In their view, the complexity of existing conditions is a major barrier to the ability of HR systems to more effectively automate processing of entitlements.
• There is no evidence that the IT costs of changes are taken into account in negotiating changes to conditions of service. As an example, the cost of automating 48/52 arrangements was estimated to be well into six figures by one systems manager. HR system managers should be included in the information network for planned changes.
• Most systems either already or will soon be able to support remote data entry (although obviously at some cost in terms of IT infrastructure and processing costs). This will provide the framework for a significant re-allocation of basic personnel processing to line areas.
• Some of the systems managers would prefer to process their own payroll without the requirement to manipulate pay-related transactions to meet the requirements of the DoF payroll system. All system managers expressed concern at the costs of modifying systems to meet changed DoF formats resulting from the redesign of that system - estimated at around $0.5M in salaries alone for some of the major systems. These costs will have to be met by users for what is perceived to be relatively little benefit.
• Current systems are operating on an aging infrastructure, but there's little prospect of a replacement system offering huge improvements. Technology advances have been more in the areas of communications infrastructure than in the kind of software that would allow systems to be developed in a significantly different way from the way they are at present.

Focus Group Comments - Staffing Issues

"Staffing personnel areas is now a poaching exercise between agencies"
ASO5 Personnel Officer

• Focus group participants at all levels in the HR environment pointed to increases in both the workload and the complexity of personnel work in recent years, and to increasing difficulties in attracting and retaining staff in personnel areas, particularly at the personnel operative (ASO3) level.
• There is broad agreement that there is little or no acknowledgement of HR expertise and knowledge requirements in terms of both systems and legislation. In recent years the work has increased in both volume and complexity - people particularly mentioned increased levels of complexity arising from the requirements of agency bargaining, permanent part-time work, superannuation and taxation.
• The view was put many times that personnel areas are no longer in a position to absorb the costs of centrally-imposed outcomes which impact heavily on personnel workloads. Participants put the view that changing workforce demographics (a shift towards the greater use of temporary, part-time or casual staff) are likely to result in continuing increases in workloads, as these are the very areas where the work is not automated and has to be processed manually.
• There is a general perception among focus group participants (including from those at more senior HR levels) that classifications at the operative level in personnel are too low, and that personnel staff have a greater volume of complex terms and conditions to administer, and higher responsibilities at lower levels, than other areas in the APS.
• The de facto base grade in personnel is now ASO 3. The general consensus is that it takes 6 to 12 months to train someone to the point where they're able to effectively administer pay entitlements and basic conditions of service - more if there are additional complexities such as remote area entitlements, shift work, or a wide variety of staff to deal with. Terms and conditions for staff in the APS are constantly changing, and there's a need to keep up to date with these changes. Different HR systems impose an additional training requirement.
• Training is mostly on the job, although the Personnel Operations Program is a valuable source of training and several agencies run specific courses for personnel staff. Several people noted the move towards HR competencies, but a number contrasted the relative lack of training for personnel staff with the ATO's Tax Officer Development scheme, and the intensive training provided to DEET and DSS counter staff on the entitlements they administer.
• There are difficulties in backfilling jobs and releasing people for training, as there's a limited pool of available staff to draw on to provide back-up. When someone acts up a level (say ASO 3 to ASO 4), they have to take their ASO 3 work with them, which often means additional overtime costs.
• Participants from HR areas put the view that personnel work is generally perceived to be "low status", and tends not to be valued by the organisation as much as the organisation's "real work". They said that this could be improved by better linkage of HR processes to other corporate planning processes, and a greater emphasis on the value of the service being provided.
• Personnel work is generally perceived by personnel staff themselves to be thankless ("continually fixing up people's problems"), with a significant minority of difficult customers and bush lawyers to deal with. There is constant pressure from deadlines, staff can be the butt of abuse, and there is the risk of becoming burnt out. There is a broad perception by personnel staff that they can get a far easier job elsewhere in the service, without the continual pressure of having to meet the next cut-off, and where the work will be easier, more fulfilling, and often better paid.
• Those who do choose to stay in personnel generally see their career in personnel work rather than in their own agency. Many of the focus group participants had worked in a number of different agencies. One large organisation has made it a condition of acceptance of promotion/transfer that you undertake to stay for 3 years; no release on temporary transfer or HDA to another area unless there's a good reason.
• Turnover, particularly at the lower levels, is inordinately high. The general level of turnover in personnel areas is such that agencies now network around each other's selection processes, and/or poach staff where they can. People agreed that it's relatively easy for staff to get out of personnel, but much harder to attract them in.
• Participants noted that the problem is exacerbated where personnel functions have been either decentralised or devolved - which is the case in most of the larger agencies to some extent. This requires properly trained staff in line areas to work properly. Regional and line areas create administrative support units, and tend to draw on personnel areas to provide the necessary expertise. Good personnel staff get snapped up, and in time may move away from personnel administration entirely. There can be particular problems replacing expertise in geographically remote areas. The overall result is a general de-skilling of personnel areas, with more mistakes and reduced productivity as a consequence.
• There was a suggestion that there is some scope for the Personnel Operations Program to provide a brokering function by operating some sort of mobility register. The point was made that when personnel jobs are advertised in the press, people seem to come out of the woodwork; perhaps there is scope for POP to expand in this area.
• An alternative suggestion was that there might be scope for using some sort of cross-agency JSC selection process for personnel jobs - recognising personnel work as effectively a job family and selecting staff for an order of merit to be accessed by participating agencies. However, different agency bargaining outcomes would create difficulties, and people might want to retain some choice as to which agency they go to.
• Suggested options for reducing activity levels and overall workload included rolling leave bonuses into salary, and encouraging greater use of flex leave to reduce small amounts of leave, as well as numerous suggestions for addressing the overall levels of complexity (recorded elsewhere), and automating those functions which currently have to be carried out manually. Several people put the view that a greater degree of flexibility regarding the existing structures in personnel areas may also be useful, for example better use of part-time staffing arrangements

Attachment E: Process review report

Project officers: Steve Allen and Jim Collins

A separate review of processing arrangements for higher duties (HDA), leave and overtime administration was undertaken in five APS agencies.

This Attachment is only currently available in hardcopy.

Attachment F : Line management time survey

Project officer- Ann Molloy

Overview

This report outlines the findings of a study undertaken to identify what proportion of their time line managers spend on Human Resource (HR) functions. The study was undertaken as part of the MIAC project Achieving Cost Effective Personnel Services, and complements other stages of the project. HRM services were defined using the service model prepared by Deloitte Touche Tohmatsu and used by the project team in the Personnel Services Survey.

Methodology

The study comprised three parts:

• an initial explanatory meeting with project staff;
• participants keeping a diary / timesheet for 10 days; and
• attendance at a brief workshop to validate the information collected through the diary timesheet.

The purpose of the diary was to identify the amount of time each line manager spent providing HR services. Expert advice in this area indicates that, if a person is asked to account for just one segment of his or her time, most people will overestimate the time spent on that one function. The diary instrument therefore tracked 100% of each person's time so that we could be sufficiently confident about the validity of the results to draw some conclusions.

The workshop segment sought to identify any 'seasonal' factors that may have affected the outcome.

Participants

A 'vertical slice' approach within participating agencies was used. Participants covered a range of agencies - policy, service delivery, central office and regional managers. The analysis in this report is based on information from 29 participants from six agencies.

The break-up of participants is as follows:

33% were central office managers; 67% regional office managers;

33% were SES officers; 24% Senior Officers and 43% ASO 5 or 6;

24% were from a policy department.

Agencies were not asked to determine how many of their staff would qualify as line managers. However, using the APS Statistical Bulletin for 1993-94, (tables 25 and 31), a figure of 15, 000 has been estimated. This figure comprises all SES staff, (except for those in the specialist band); all SOG As and Bs; and all SOG Cs and ASO 6s outside the ACT.

Summary

• There was a wide variation in the amount of time spent on Human Resource (HR) services by line managers participating in the survey.
  The variations between participants range from zero to 47%.
  The average time spent by participating line managers on HR processes (as defined in the service model) was 10.5% (note, this is not total time spent managing people).
• There are marked differences between staff from different agencies. Participants from two policy departments averaged 4%, those from program delivery departments averaged 16% (see graph below).
  Only one agency showed marked differences between participants, from almost zero to 18%.

  

• The majority of participants' time was spent on four HR processes:
  30% on HR planning and policy;
  22% on recruitment and selection ( with 17% on interviewing);
  13% on performance management and appraisal issues; and
  7% on pay and conditions processing.

  

• Managers responsible for administering large numbers of staff appeared not to spend any more time on HR than those with smaller staff numbers in their organisational units.
  It is estimated that the number of line managers in the APS could be as high as 15,000. On this estimate, and based on the indications from the sample in the survey, time spent by line managers on HR processes could account for up to around 1400 average full time employees (AFTEs) a year.

Findings

Time spent on HR processes

The proportion of time spent by line managers on HR processes (as defined in the service model) varied widely (note, this is not total time spent managing people)

. Among the survey participants this proportion varied from zero to 47%, with the average being 10.5%. There was no trend discernible between officers at different levels. The two participants with the highest proportion of time spent on HR processes were an ASO 6 in the regions and an agency head; the two with the lowest were an ASO 5 in the regions and a Deputy Secretary.

There were clear differences identified between participants, depending on the type of agency for which they worked (ie. policy or program delivery). Participants in the survey from two policy departments averaged 4%, those from program delivery departments averaged 16%.

There was no clear correlation between the total numbers of staff managed by individual participants and the proportion of time spent on HR. The same applied to numbers of staff reporting directly to participants. For example, of the group who spent between 10% and 20% of their time on HR processes, the numbers of staff in the organisational units managed by these participants ranged from 16 to around 3,000; while the numbers of staff reporting directly to participants in this group ranged from 2 to 27.

Nearly 70% of participants said that the survey period was a normal one for them. For example, the participant who described the period as abnormal because it included his first selection process in twelve months in the job was balanced by one who spent no time on recruitment over the survey period, but was expecting to spend the next 10 days almost exclusively on interviewing for a large selection round. Similarly, participants who spent a large proportion of their time on corporate planning issues were balanced by participants who noted that corporate planning in their organisations tends to happen in chunks, and that the survey period did not cover one of those times.

Where HR time was spent

The majority of participants' time was spent on four HR processes:

• 30% on HR planning;
• 22% on total recruitment and selection ( with 17% on interviewing);
• 13% on performance management and appraisal issues; and
• 7% on pay and conditions processing.

Generally, there was a similar pattern of where HR time was spent among participants from similar types of agencies. It is possible that this reflects differing management priorities, although it may simply reflect the nature of staff working in different types of organisations, for example between small policy areas and large service delivery ones.

Some of the differences identified between participants from different agencies could also be affected by the extent to which they have devolved authority and accountability. Certainly, staff from one agency with low percentages of time spent on HR processes noted that their delegations are all held right at the top.

Recruitment and Selection

The majority of selection effort recorded by participants was in regional service delivery type offices, or organisations undergoing major restructuring. Regional office managers at ASO 5 and ASO 6 levels in one organisation agreed they would each participate in five or six selection exercises a year.

Participants from another regional organisation, without selection exercises during the survey period, commented that the absence of time spent on selection exercises was different from previous years, but more likely to be the pattern for the immediate future.

The time spent on selection exercises during the survey period ranged from 15 minutes to interview a potential temporary staff member to eight and three quarter hours. On average, participants spent five and a half hours interviewing time on each selection exercise conducted.

There was a clear view expressed by several participants that the time spent on selections is lengthened by the perceived emphasis on process. For example, one agency's participants have all write-ups checked by the regional managers before they go to the delegate, to ensure process has been met. All participants who raised the issue of time spent on write-ups stated that the external scrutiny on these documents focusses solely on whether the process has been complied with, and noted that the recommendation itself is rarely changed. This is consistent with the views expressed by focus group participants as part of the wider consultation process.

Several participants stated that the time they spent on selections was extended by not having control over the process. For example, one division head spent several hours arguing for permission to abolish a SOG B position within his own division because the delegation to do so is held by another division head.

Grievances

An initial view that grievances take up a large percentage of line manager time was not supported by the findings of this study. The overwhelming response from participants was why is there this focus on grievances? In their view, a formal grievance is only lodged if the line manager has not been doing their job and nipping trouble in the bud in the early stages.

Only one participant was involved with a formal grievance. Several participants commented to the effect that line managers decide unofficial grievances - the ones that don't make the formal framework processes used for this survey. Only when the situation is irreparable do you get to the stuff the framework is measuring was a common response from participants when discussing grievances. The exception to this would appear to be grievances relating to performance pay issues. The colleague of one participant was dealing with nine of these (the result of that agency's latest performance pay round for SOG Bs).

Some participants speculated that large numbers of grievances reflect a different style of operation, and that grievances are far more likely to occur in areas where large numbers of people are doing the same work, particularly at the lower levels, where perceived inequities can be far greater, and staff movement slower.

Views about services provided by personnel

Participants from different agencies expressed widely different views about the service provided by their personnel areas, and the impact (or lack of impact) this has on the amount of time they spend on HR processes. Generally, staff from agencies where line managers spent higher percentages of time on HR processes commented positively on the service provided by their HR areas. Several participants likened the service to a consultancy one.

At the other end of the scale were participants, particularly from one agency, who expressed very negative views about their personnel area. One of these participants said that their personnel area are there to hinder you. Generally, they viewed their HR area as having no conception of providing a service to their clients (the line managers). This group thought that this attitude contributed significantly to the frustrations line managers encounter in dealing with HR processes.

One participant, a regional manager shortly to take on HR responsibilities for their office, reported that they have been offered no support or training, and can find no-one in the organisation to go to for advice.

Other

Only one line manager was involved in the direct provision of HR training. However, several participants queried the framework model, arguing that planning and oversighting were inseparable from the process role for a line manager.

Another participant commented on the additional amount of time a colleague has to spend on selection exercises because she is a woman, there being few women at that level in that particular agency.

Attachment G: International overview and case study

Project officer- Ann Molloy

Findings

• The broad directions for change in Human Resource Management appear similar in most countries examined. The front runners are generally seen as being New Zealand and Sweden, with Australia, Canada and in some instances the UK on the next level.
• Information about personnel practices at the micro level (leave processing arrangements etc) is not readily available in published form. This report therefore focuses on a case study of a particular agency in New Zealand.
• There are numerous features of the way personnel services are provided in the New Zealand Income Support Service which are worth serious consideration and possible adoption here. These include:
• elimination of personnel sections in the normal APS sense (each region retains a HR consultant);
• team managers (first level supervisors) have responsibility for approving leave, based on up to date information about balances;
• limited requirement to provide leave forms (eg no leave forms required for sick leave). Leave is recorded on a weekly timesheet retained by the supervisor;
• team managers advise payroll area of leave, HDA, etc;
• automatically updated leave records available each month;
• simplified conditions (eg unlimited sick leave, - Collective Employment contract covers only 1.5 pages)
• collective employment contract written in plain English, considerably reducing the need for explanatory manuals, Toolbox etc;
• pay processing centralised into two areas;
• flexible requirement to advertise positions;
• selection and recruitment delegations held by line managers (including team managers); and
• from 1 July, team managers will also have authority to determine where on pay scale a staff member belongs.
• There has been little or no formal evaluation of these changes - most are too recent for an answer to be apparent.

Overview

The published information on human resource services generally relates to happenings at the macro level, particularly performance pay and other issues outside the terms of reference for this project.

The directions in which public services in English speaking countries are moving appear to be fairly similar. Both The Australian Public Service Reformed and the report of the Australian Public Service Act Review Group concluded that the directions in which Australia is moving are broadly similar to other Western democracies.

PUMA, the public management committee of the OECD, recently carried out a case study involving: Australia, Denmark, France, the Netherlands, New Zealand, Spain, Sweden, and the United Kingdom.

The draft report states:

"There were weaknesses in most of the organisations studied in terms of translating HRM objectives into specific targets and strategies...and in terms of the linkages between individual goal setting and performance review and organisational performance planning targets."

In their view, this is because the common focus on restructuring and downsizing has diverted HR energies into managing redeployment and redundancy. Only when organisational changes have slowed can we expect a more comprehensive, strategic approach to HRM.

Interestingly, the draft report notes that managers "are often slow to take full advantage of the new flexibilities available to them", identifying the reason as line managers being given HRM responsibilities before they have an opportunity to develop the necessary skills. "Line managers also complain of a lack of clear and easy-to-apply guidelines. They are also reluctant to accept HRM responsibilities if the delegation is only partial; they feel they cannot successfully tackle some aspects while others are outside their control." [PUMA]

The OECD study also comments on the importance of training, suggesting that "Devolution will have disappointing, if not disastrous, results if managers are not provided with adequate training and support to take on tasks previously handled through central offices or agencies." [PUMA]

New Zealand

In New Zealand, the 1988 State Sector Act made Chief Executives Officers (CEOs) of government departments the employer, with independent authority in personnel related areas. They are required to respect certain procedures for the appointment of staff, discipline and dismissal, OH&S and minimum leave entitlements. The 1988 Act also obliges them to be good employers, requiring them, for example, to appoint staff impartially and to provide opportunities for staff development.

The State Services Commission (SSC), which formerly held all HRM authorities, retains an operational role only in relation to the employment of chief executives, pay determination and contracts for the senior executive service. Since 1992, authority for negotiating pay and other conditions of employment has also been delegated to CEOs, with the SSC setting broad policy parameters, participating in negotiations and approving departmental agreements. [PUMA]

Sweden

In Sweden, the devolution of HRM is considered a lynchpin of the program for public sector reform. Agencies and boards now control most aspects of their HRM policies and operations, with very little intervention by central bodies. The Ministry of Finance fixes salaries for agency Directors-General and advises on their recruitment. A service wide system of pay and grading was abolished in 1990, leaving agencies free to determine their own pay structures and to set pay individually for their employees. Individual agencies negotiate pay increases subject only to a ceiling on the total pay bill and to centrally negotiated minimum wage increases. [PUMA]

Devolution has progressed to the stage where, from 1994, agencies are free to decide the balance between centralised and decentralised negotiations and whether they wish to be represented by the National Agency for Government employers. [PUMA]

Canada

In December 1989 the Canadian Government introduced a public service renewal initiative called Public Service 2000. It was designed to streamline administrative processes and improve organisational culture and performance to better serve Canadians. The initiative focussed heavily on the government's employment and personnel management regime, central administrative controls, the roles of central agencies and systems of personnel.

UK

In the UK, until recently devolution occurred on an agency by agency basis. Legislation passed in 1992 enabled the delegation to departments and agencies of authority for determining terms and conditions of employment. From 1994, the responsibility for pay determination has been devolved to larger executive agencies (covering more than half the Civil Service). [PUMA]

Case study - New Zealand Income Support Service

Discussions with staff in the New Zealand State Services Commission and Income Support Service have elicited the following picture of how one agency's personnel services are delivered in a very different way to here in the APS.

Organisational Structure

The New Zealand Income Support Service (ISS) is one of the two business arms of the Department of Social Welfare. It equates roughly to the age, invalidity and unemployment support responsibilities of the Australian Department of Social Security. There are approximately 4,500 staff spread throughout New Zealand, with a National Office in Wellington. The regional structure is four regions, each divided into districts. Within each district are several team managers, controlling up to 15 staff who do the pensions processing work, deal with clients etc. In the Christchurch District Office, there are 17 team managers. Team managers are at the grade 05 level (roughly equivalent to our ASO5 level). Prior to the beginning of the reforms there were an additional 3 or 4 levels between the team managers and the district managers. From 1 July, the 01 to 03 grades will be merged into one level called 'Customer Service Officers'.

The agency negotiates a collective employment contract with its staff that sets out details of all pay and conditions, as well as termination arrangements and grievance procedures etc. The current contract runs for the period from 1 July 1994 to 31 October 1996.

Transfer of responsibility for leave approvals from personnel sections to team managers

The ISS no longer has personnel managers or sections as we know them in the APS. Each of the four regions into which the ISS is divided has a Human Resource Consultant. Very few districts have retained any dedicated personnel officers. The

driving force behind this decision was the need for the service as a whole to be competitive with private enterprise - line managers managing HR was seen as the way the private sector operates.

Discussions with staff in the ISS indicate that, while initially there was some resistance from team managers to having this extra responsibility, the system is now working well. The Payroll supervisor reports far more problems with the districts that have retained personnel officers than with the team managers. The payroll supervisor provided initial training to all team managers and still provides guidance on payroll and other HR issues.

Leave processing

Leave forms are only required for recreation leave. Rec leave forms still go to the accounting centre, but approval is given by team manager on basis of whether the applicant has the available credit. Sick leave is approved by team managers and merely noted on each person's time sheet. Each staff member completes a timesheet for glide time provisions (flexitime). Some team managers agree an honesty approach with their team, under which team members just tick the timesheet for attendance and sign.

Each week the team manager prepares a form for the accounting centre that summarises peoples' attendance, sick leave, overtime etc. This summary sheet is then sent to the accounting centre for input of data into the computer to calculate pays.

Team managers receive a monthly report from the accounting centre showing how much leave etc team members have taken during the month, and what everyone's balances are. People's pays remain unchanged unless the accounting centre is advised of a new rate by the team manager.

From 1 July the ISS will introduce a new appraisal system, under which they will pay people for their skills, ability and performance. An annual appraisal system will identify the precise salary point at which the person will be paid. The team managers must do a minimum of four coaching sessions a year to identify needs, development opportunities etc. Performance is scored on a continuum, with 5 being the top rating. People who score 4 or 5 are eligible for superior performance payment, even if they are not at the top of the salary scale. Staff can request an appraisal during the 12 month period. If a person is recruited with some skills, they need not start at the bottom of the pay scale.

Simplified conditions

Conditions of employment (rec leave, sick leave etc) across New Zealand public sector agencies are generally fairly similar; although pay rates may differ. Generally agencies now have few allowances - the agencies that did have numerous allowances have mostly been privatised.

Approval processes for pay and conditions are generally much simpler now, because there are fewer steps. For example, if something is not specified in the Collective Employment contract, there are only two players involved in deciding whether it is to be paid, the union and the particular department.

The Collective Employment contract for the ISS is a relatively straight forward document, with many conditions far simpler to calculate and pay than the equivalent APS provisions. For example, recreation leave for part time workers is a simple calculation based on their average weekly wages. The service also has unlimited sick leave - after 5 consecutive days staff must produce a medical certificate if asked to do so by their team manager, but not otherwise.

The termination provisions are also straightforward, following simple natural justice provisions in clear English.

Unlimited sick leave was introduced in the latest Collective Employment contract. People with previous entitlements are still using these up, then they go onto unlimited provisions. The unlimited with pay is being interpreted as "provided you are definitely going to get well enough to come back to work" However, this is a new provision and has not really been tested yet. If someone will not be returning, it would be a matter of negotiation with the individual.

The Collective Employment contract is clearly written and easy to understand. For example, it covers sick leave provisions in less than one and a half pages.

Payroll functions

The ISS has two accounting centres, whose responsibilities include payroll and administering leave records (ie maintain computer records). The Southern Accounting Centre is in Christchurch and has 9 payroll staff (to pay approximately 2,500 people, including national office staff in the North Island). The northern accounting centre has roughly 7 payroll staff to pay 2,000 people.

New Zealand no longer has a centralised pay system for the public service. This was abandoned because it was not flexible enough. They no longer have a Continuous Record of Personnel - each Department keeps its own. The system most commonly used by Departments is known as CHRIS, and is both a pay and personnel records system.

The ISS is currently using a payroll system called PIPS, an old and inflexible Government system. They are about to change to CHRIS and expect to be able to reduce staff slightly after CHRIS is in and bedded down. They also have an information management system that they use to pay approximately 200 casual staff, and a leave package originally bought from the New Zealand Ministry of Agriculture and Fisheries and adapted to ISS needs. The leave package generates leave accruals, and can produce absentee reports by particular day easily, for varied reporting groups (whole business, or particular teams). It also has a facility to export to Excel. The accounting centre also gets a disk each month from PIPS with all pay details, which they then use to automatically update the leave system at the end of each month.

The ISS has centralised processing over a period of time. At the time that they centralised in the South Island (July 1991), they were able to reduce staff clerk numbers from 28 to 8. They still maintain a paper file on all staff. Under CHRIS they expect to be able to become fully computerised.

The ISS did have a reasonably simple system of eligibility and allowances. This has now been complicated by 600 individual contracts and 3,500 on the collective contract. However, payroll staff advise that there has been no significant extra manual calculation work as a result . Although PIPS is relatively inflexible, they have been able to use the back of the leave system to update records automatically.

Payroll staff work off weekly summary sheets from team leaders, plus advice (again from team leaders) of changes to account details, rates of pay, promotions/demotions. All recreation leave is approved by team managers, based on remaining credits.

Selection process

The only rule about advertising vacant positions is: Must notify the vacancy in such a way that suitable people can apply. Some positions are advertised in the press, but most lower level positions are advertised only within Departments (on the grounds that the expense of advertising is not justified by the sort of skill level you are looking at).

They still have similar selection processes to ours - applications, interview, write ups etc., but the delegate is usually someone one level above the people on the panel, and in the relevant area. New procedures recently introduced within the ISS require the delegate to be the chairperson of the panel, as well as the team manager to whom the recruit will work.

Appeals no longer exist, but applicants can seek a review if they have applied unsuccessfully for a job within their own agency only. Advice was that the system is used far less than the previous appeal system was, although numbers were not available.

Reduced incidence of HDA

HDA is still available, although the flatter structure introduced in the ISS has reduced the incidence of HDA. The Collective Employment contract provides for a minimum qualifying period of five working days each time someone acts in a higher position.

Evaluation

Apart from the review The Australian Public Service Reformed and the Logan Report in New Zealand, there has been little formal evaluation of micro personnel changes. The draft PUMA report referred to earlier states that "There has been little systematic evaluation of HRM reforms. Australia and New Zealand have undertaken an assessment in the context of overall reviews. However, many of the reforms are too recent for a full and balanced assessment and...the impacts may not become apparent for a number of years." [PUMA]

Attachment H: Occupational stress - A Commonwealth perspective

Dr Peter Shergold
Chief Officer
Comcare Australia

March 1995

Occupational stress - The Comcare Australia experience

This paper indicates the initiatives being developed and trialed by Comcare Australia in response to the emerging issue of workplace stress. Comcare is the Commonwealth Government's workers compensation and occupational health and safety agency, covering 500,000 employees across Australia.

The challenge for Comcare is similar to that facing other Australian worker's compensation jurisdictions. We all seek to constrain upward pressures on our premium and liabilities. Most, as part of this challenge, confront a significant rise in the incidence and cost of claims for occupational stress, and the same controversy that this issue seems to generate.

I am therefore mindful in speaking today that the initiatives being introduced by Comcare may not be substantially different to those being trialed in other jurisdictions. I believe that this is one area where collaboration and sharing of experiences and innovations can only benefit all of us who have responsibility for the management of workplace health risk.

What is stress?

Herein lies one of the most common problems - and misconceptions - surrounding stress conditions. Just what is it, and what causes it?

Occupational stress is a complex issue which too often prompts easy answers.

Indeed much of the debate about occupational stress, particularly in the public arena, harkens back to the early days of 'the RSI epidemic'. Where did it come from, we didn't get it in my day, it's the latest excuse for those who don't want to work, it isn't really a medical condition are the familiar stereotypes used to dismiss the problem.

Such ill-informed prejudice leads to a search for simplistic solutions. Some opinion leaders suggest that if stress is not the result of some traumatic workplace incident such as physical attack - then it should either be made non-compensable or the level of benefits paid as compensation be reduced.

That would certainly minimise costs. It would not address causes.

Stress did not 'come from nowhere'. Workers have always experienced a degree of stress in their working lives. What has changed?

In short, both the workplace and the worker.

Within the workplace there has been a period of rapid change marked by increased dependence on information technology, flatter forms of organisational structure, management processes focussed on individual performance and higher levels of productivity. Outside the workplace, at least for those in paid employment, there have been both organisational and financial pressures to extend the regular working schedule and new constraints on people's off-work time. Worker expectations of the relationship between paid and unpaid labour are changing.

Unfortunately our understanding of occupational health and safety has not kept pace. 'OHS' in the 1990s carries too much cultural baggage from the 1890s. Plant guards, machine standards, handling of hazardous materials and decibel levels are all important concerns for employers seeking to provide a safe workplace. But increasingly they are an inadequate guide to providing a healthy workplace.

Workplace health can no longer focus on the relationship between worker and machine. Instead it must increasingly be concerned with the relationships between worker and manager, worker and worker, worker and client and worker and family. Dysfunctions in these human relationships are just as damaging as faulty or poorly operated machinery, if not more so. Just as RSI indicated that the speed of technological change had outstripped the pace of human adjustment, stress conditions are an indication of the danger to employers of overlooking or discounting the people factor in any work environment.

As Williamson, for Worksafe Australia, has noted:

"Stress involves a dynamic relationship between people and the situation and experiences that they encounter. Stress can occur due to situations and experiences at work or outside work. An individual's perceptions of a situation or experience will influence whether it is a stressor for them."

It is true that stress affects all workers in varying degrees. But whether occupational stress makes workers ill, or contributes to it, depends not only on the personal attributes of the worker but her/his training, support network and management environment.

It is also a fact that it is only in the last few years that the rising costs of occupational stress have become evident. In the past stress was often hidden as unplanned absences or sick leave. To a considerable extent it is still. Compensable injuries were frequently recorded as injuries such as muscle pain, migraine, allergic reactions or similar symptoms. Now, in part because the stigma attached to admitting to stress or 'mental disorder' - has been slowly diminished, the costs of stress are increasingly being identified in the compensable costs of workers' compensation insurance.

What does stress cost?

Data from Comcare Australia's administration of the Commonwealth and ACT governments' workers' compensation scheme bear stark testimony to the increased costs of occupational stress.

Since 1989-90, the inception of the Comcare scheme, stress has steadily become a significant proportion of claims and costs:

Table 1 shows that by date of injury stress claims accepted have risen from 800 in 1989-90 (4.5% of total claims) to 1599 in 1993-94 (8.9% of total claims);

Table 2 shows that by date of receipt stress claims accepted have risen from 816 in 1989-90 (4.2% of total claims) to 1543 in 1993-94 (8.7% of total claims).

The situation is continuing to worsen. The number of accepted stress claims is rising at about 20% each year:

• estimates based on the first 7 months of 1994-95 indicate that by date of receipt stress claims accepted will rise to 1900 in 1994-95, 2280 in 1995-96, 2736 in 1996-97, and 3283 in 1997-98;

Those suffering compensable stress are generally slow to return to work. Traditional rehabilitation programs have proved relatively ineffective. As a consequence the average liability associated with a stress claim is approximately $25,000 compared to $9,000 for all claims.

However stress is not just a problem for the Commonwealth's workers' compensation scheme. The fact is that the costs of workplace stress are rising in both private and public sectors, from one end of Australia to the other:

• in Tasmania compensable stress claims increased by 81% between 1991-92 and 1993-94;
• in New South Wales compensable stress claims rose 35% between 1991-92 and 1992-93;
• in Queensland compensable stress claims grew by 82% between 1992-93 and 1993-94.

By whichever index it is measured the costs of occupational stress which are captured in workers' compensation data are now substantial:

• in the Commonwealth it is likely that the liability for stress claims received this financial year will be almost $50 million;
• in the Queensland public sector in 1993-94 stress was the cause of 7% of compensable injuries and represented 26% of claims costs;
• in the whole Northern Territory jurisdiction stress claims represented 12.1% of annual compensation payments in 1993-94;
• in Tasmania in 1993-94 occupation stress comprised 21.0% of industrial diseases;
• in South Australia in 1993-94 stress-related absences were responsible for some 5% of all time lost for injuries and about 10% of time lost in government departments, schools and hospitals.

In all jurisdictions, too, the average cost of work-related stress is significantly higher than for other injuries:

• in Western Australia in 1993-94 no less than 27.6% of work-related stress injuries for men were classed as severe, marked by long absence from work, compared to only 9.1% for all injuries: for women 23.5% of work related stress injuries were severe, compared to 14.2% of all injuries.

It is true that data from around the country indicate that claims for work-related stress are significantly higher for public sector environments:

• in Queensland the incidence of stress claims per 100 employees is almost 5 times greater for public servants, averaging 0.56 for government employees but only 0.12 for other (predominantly private sector) workers;
• in South Australia the State government has a stress claims incident rate at least 6 times higher than private employers;
• in the Northern Territory 64% of accepted stress claims are from the public sector, representing a claims rate more than 10 times that in the private sector;
• in Western Australia the equivalent figures are 3.6% for clerical occupations compared to 0.8% overall.

However it would be wrong to stereotype occupational stress as just a public sector phenomenon. Rather it is symptomatic of white-collar office-type environments:

• in Victoria, for example, the rate of stress reported in private sector banks is equally as significant as in the public sector, the National Australia Bank reporting that 11% of claims were for mental illness and Westpac reporting over 15%;
• in the Northern Territory occupational stress is responsible for 5.8% of claims in the clerical sector, compared to 1.5% overall.

More generally it is service sector industries that report the highest incidence of work related stress:

• in South Australia the percentage of compensated days lost as a result of stress in community services, wholesale and retail trade, recreation and personal services and the finance and property industry is about twice that in manufacturing and some five to seven times that in the construction, mining and agricultural sectors.

What is happening in Australia is part of a global phenomenon. Work-related stress is a disease which has become far more important in service-oriented, post-industrial societies:

• in the USA stress claims have trebled since 1980 and job stress now represents 15% of all occupational disease claims;
• in the UK it is estimated that stress costs represent 3.5% of GNP and that more than 40 million working days are lost through work-related stress each year.

What causes stress?

There have been considerable changes since 1989 in our understanding of the causes of occupational stress.

The pioneering research sponsored by Comcare Australia in 1989 indicated that trauma resulting from hostile incidents and client aggression was a major cause of stress claims.

Research now being undertaken by Comcare is starting to reveal a much more detailed picture, indicating that post-incident trauma is relatively unimportant as a cause of stress. In the vast majority of instances workplace stress is a response to work processes, workplace organisation and management practices in an environment of considerable change.

In 1993-94, of those stress claims approved by Comcare, only 17% related to physical or verbal abuse. In contrast:

• 24% related to interpersonal conflict;
• 24% related to pressure from work deadlines;
• 22% related to anxiety caused by organisational change;
• 7% related to performance counselling and other management processes; and
• 6% related to forced relocation and organisational restructuring.

Gender issues

Comcare's recent research indicates that women are over-represented as a proportion of those lodging a claim for occupational stress.

Since July 1989 there have been 2803 claims accepted for males compared to 4256 for females:

• for males 4.2% of accepted claims have been for stress; but
• for females 10.2% of accepted claims have been for stress.

This trend is reflected in all jurisdictions with the proportionate incidence of work-related stress among women being three to four times as high as among men. For example:

• in South Australia the percentage of claims for stress is for women more than three times that for men (3.1 % compared to 1.0%);
• in New South Wales the ratio is similar (2.5% compared to 0.9%);
• in Western Australia the ratio, based on a comparison of rates of 'occupational disease', is also similar (28.5% of time lost for women compared to 9.6% for men); and
• in the Northern Territory the equivalent ratio is more than four (3.7% compared to 0.8%).

This gender difference almost certainly reflects the double stress faced by women seeking to balance the demands of paid work and family responsibilities.

In some jurisdictions there is evidence that the largest increase in occupational stress is now occurring among men:

• in South Australia between 1991-92 and 1992-93 compensable claims for stress rose 15% for women but 45% for men.

But that trend is not universal. In contrast:

• in New South Wales between 1991-92 and 1992-93 mental disorders increased 35% for women but 22% for men.

There is also evidence that the costs per claim associated with women's stress claims are lower than for men:

• in South Australia the 1.0% of compensated men's claims that were for occupational stress represented 4.3% of costs, whereas the 3.1% of women's claims represented only 9.4% of costs;
• in Western Australia in 1993-94 the average working days lost per million hours worked for stress injuries averaged 57.9 for males (compared to an average of 22.3 for all injuries) and 46.1 for females (compared to 31.1 for all injuries).

In part this reflects the lower incapacity payments associated with women's inferior status in the labour force and their wages. However it would also appear to indicate that women who receive compensation for occupational stress take less time off work and/or incur lower medical costs. The reasons for this are not clear. It is an issue which warrants greater analysis.

Occupational Issues

Comcare's research also shows that, at least among men, stress is not only predominantly a white-collar, clerical phenomenon. It is also more likely to be an injury reported by supervisors, middle managers, para professionals and professionals.

- for males, stress claimants represented 4.8'% of all claims accepted since July 1989 for those earning less than $825 (approximately ASO 6) but 12.2% of all claims for those earning $825 or more;

- for females, the trend was similar but less marked (10.2% compared to 14.6%).

In 1993-94 no less than 24.7% of men who lodged compensable stress claims in the APS had occupations which were identified as managers, supervisors, professionals and para professionals. In contrast only 9.2% of male claims were from labourers, tradespersons, drivers, machine operators, cleaners or factory hands.

It is likely that this reflects the fact that the processes of downsizing, delayering and reorganisation have placed greatest pressure upon middle managers. Certainly the trend also appears evident in the private sector:

• in South Australia occupational stress is significantly over-represented in claims from male general managers and shop managers and from female welfare para-professionals;
• in the Northern Territory, where the compensable claims for stress represent 1.5% of all injuries, the percentages are very much higher for para-professionals (3.4%), managers (5.1%) and professionals (6.8%);
• in Western Australia, where mental stress is responsible for only 0.8% of occupational injuries and diseases the rates are very much higher for para-professionals (1.8%), managers and administrators (3.3%) and professionals (7.4%).

Age issues

It might be expected from the occupational profile that the incidence of occupational stress is likely to increase with age. However Table 3 indicates that while that trend is reflected in the Comcare data it is modest in nature.

Overall 58.1% of permanent employees of the APS are aged less than 40 years but they lodged 52.9% of compensable stress claims. Conversely the 41.9% of APS employees aged 40 years or more lodged 47.1% of compensable stress claims.

In short, gender and occupational level appear to be key determinants of the probability of compensable stress. Age seem to be of less consequence.

However, in part reflecting seniority in the occupational hierarchy, the average cost of stress claims to the compensation system is much greater with age. For employees aged 24 years or less the average cost to date for 1993-94 claims is $2,573 rising:

to $5,506 for those aged 25-34 years

to $7,932 for those aged 35-44 years

to $8,006 for those aged 45-54 years

to $10,009 for those aged 55 years or over.

How can workplace stress be addressed?

It is important to differentiate here between the role of the employer and the role of the insurer in addressing occupational stress. While the insurer can improve its claims administration and management procedures, it is the employer who has the most power to change workplace practices to tackle the causes of stress.

The Insurer - New Approaches

Stress Claims Management Centre

In an attempt to concentrate resources on this issue, Comcare Australia has recently established a Stress Claims Management Centre. The Centre represents a holistic approach incorporating preventive approaches, improved administrative arrangements and more effective rehabilitation. The Centre will incorporate medical and legal expertise as well as proactive claims management and internal review. It will focus on early intervention, and on finding improved rehabilitation approaches.

The Stress Claims Management Centre will also undertake new research in occupational stress. This remains an under-researched field, and we look forward to collaborating with others as we attempt to understand better the causes and effects of stress and to find preventive and rehabilitation strategies to address it.

The establishment of a Stress Claims Management Centre will not provide a panacea. Indeed, no one action will provide an easy solution to a very complex problem. What the Centre will do is to allow us to trial and evaluate a variety of measures in order to identify those which are most effective in reducing the human and financial cost of work-related stress.

The Employer

The Role of Effective People Management

Managers need to recognise their legitimate responsibility in assessing the above factors and considering human resource management interventions prior to the introduction of clinical/medical interventions. Research undertaken by Comcare Australia identified that proactive HRM approaches to staff exhibiting stress responses are generally more successful than a clinical/medical approach which is usually only applied after a claim has been received.

This would suggest that an essential prevention strategy therefore is to ensure that management practices and philosophies are transparent, open and equitable. The following factors are significant in terms of workplace health:

 

• job control;
• definition of role;
• job content (varied, meaningful);
• feedback;
• participation;
• career development;
• work load and pace;
• work scheduling.

Future directions

Achieving The Balance

We all tolerate a degree of stress in our lives. Each of us has a level of tolerance, beyond which we do not cope as well with stress. Almost inevitably, the very act of working for an income will bring with it some stressors, and again each of us will cope with these in different ways and to different degrees. All of this begs the question - to what degree does work contribute to a stress condition. This is one area which is likely to receive more legislative attention across jurisdictions in future.

There are some occupations which are recognised as being inherently more stressful than others - nursing, teaching, counselling, dangerous occupations, and those jobs dealing with aggressive or unhappy clients are only a few examples. Employers need to think seriously about strategies to avoid burnout and over-exposure in these fields; term appointments and job rotation and the like are possible responses.

There is now also emerging the concept of stress tolerance. If each of us has a different level of stress tolerance, is it appropriate for employers to test or measure this as part of a selection process? I believe this is an issue that employers will be raising with us in future.

Stress claim numbers are an indicator of the increasing pressure to examine workplace health in the context of whole of life health. Clearly an individual's personal stressors will impact on their work and on their ability to tolerate work stressors. In this regard, those employers who provide employee assistance programs, and who are seeking to enhance flexibility for those employees juggling home and work responsibilities, are at the forefront of this stream of thinking.

Individuals do not shut down their personal lives when they arrive at work each day, and we need to understand more their needs as whole people. Whether a condition is compensable is one issue, but even where it is not, there still exists a need for all of us to offer what support and assistance we can to ensure that employees are as productive and positive as they can be.

Community Attitudes

The challenge of occupational health and safety in the 1990's is not simply the old one of preventing workplace accidents and removing the causes of industrial disease. Unsafe plant, machinery and equipment and dangerous work practices are becoming a less significant part of the story. What we now need to do is to promote workplace health and that involves issues such as poor people management, inadequate communication, lack of staff involvement in decision making and inflexible work arrangements. Such factors are less susceptible to legislative control. Preventive strategies are as much about relationships between workers as between workers and their equipment.

Stress is a clear example of the need for attitudinal change. Combating such injury does not lend itself to control through OH&S legislation. It involves addressing vocational discontent and adjustment reactions to the pace of workplace change. Whereas one component of preventing workplace accidents is enforced through inspections, investigations and prosecutions, promoting workplace health cannot. It involves behavioural change. A holistic integrated approach is required to be promoted through education, training and organisational health audits.

Beyond this there is a need to take awareness of the economic and social costs of workplace injury and disease out in the broader community. If an absence is not compensable there may be a direct saving to the insurance scheme, but the community will wear the cost eventually - through lost production time, higher production costs and through cost shifting onto the Commonwealth health and social security budgets. Until as a community we agree that workplace injury is unacceptable, we are unlikely to change actual behaviour in the workplace.

For further information about the issues raised in this paper and Comcare Australia's approaches to occupational stress please contact the Stress Claims Management Centre on (06) 275 0018.

Table 1: Stress Claims by Year of Injury

Date of Injury Year	No. of Stress Claims	Stress as % of total claims	Stress as % of total costs
1989-90	800.00	4.46%	17.81%
1990-91	939.00	4.89%	17.18%
1991-92	1124.00	5.73%	20.85%
1992-93	1364.00	7.18%	21.71%
1993-94	1599.00	8.91%	24.50%
1994-95 (to 31/1/95)	1772.00	8.39%	25.00%

Table 2: Stress Claims by Year of Claim

Date of Claim	No. of Stress Claims Received	No. of Stress Claims Accepted	% of total claims
1989-90	1040.00	816.00	4.2%
1990-91	1128.00	893.00	4.6%
1991-92	1352.00	1074.00	5.4%
1992-93	1576.00	1272.00	6.9%
1993-94	1927.00	1543.00	8.7%
1994-95 (Projected)*	2280.00	1900.00	8.7%
1995-96 (Projected)	2736.00	2280.00	10.7%
1996-97 (Projected)	3283.00	2736.00	n.a
1997-98 (Projected)	3940.00	3283.00	n.a

KEY:
* Based on the first seven months of 1994-95
NOTE: Since 1990-91 accepted stress claim numbers have increased 20.0% per year on average

Table 3: Stress Claims by Age 1993-94

Age Group (Years)	APS Employees (%)	Stress Claimants (%)
Under 24	8.90	8.70
25 - 29	14.60	11.30
30 - 34	17.30	15.90
35 - 39	17.30	17.00
40 - 44	16.50	17.30
45 - 49	13.70	15.10
50 - 54	7.20	9.20
55 - 59	3.30	4.20
60+	1.20	1.40

Attachment I : Key performance indicators

The following performance indicators were used to measure organisational performance as part of the survey of 25 agencies plus a number of private sector organisations. An AFTE is an average full-time employee, equivalent to an ASL.

TOTAL HR SERVICES	KPI
Total HR expenditure per AFTE within your organisation	$
Total HR expenditure as a percentage of total organisation recurrent expenditure	%
HR AFTE's as a percentage of your organisation's AFTE
Average time spent per HR person in formal HR training
No. of HR AFTE's changing jobs as a percentage of total HR AFTE's	%
No. of HR staff losses as a percentage of total HR AFTE's	%
Average time spent by HR practitioners in a particular position	months
Average years experience for each HR AFTE within Human Resources	years
RECRUITMENT & SELECTION
Cost of providing the recruitment and selection service as a percentage of total HR expenditure	%
Cost of providing the recruitment and selection service per total organisation AFTE's	$
Average cost of hiring an employee	$
Percentage of individuals recruited using Selection Advisory Committees	%
Percentage of individuals recruited using scribes	%
Percentage of individuals recruited using Joint Selection Committees	%
Recruitment and selection AFTE's as a percentage of total HR AFTE's	%
Average time to fill a position using JSC's.	days
Average time to fill a position NOT using JSC's (excluding graduate recruitment programs)	days
Average time to fill a position (excluding graduate recruitment programs)	days
Retention rate: Percentage of individuals recruited staying longer than 6 months	%
Turnover rate: Number of people exiting the organisation as a percentage of total organisation AFTE's	%
Number of grievances lodged against selection processes as a percentage of total number of individuals recruited.	%
Number of active appeals as a percentage of total number of individuals recruited.	%
Number of recruitment appeals that were successful as a percentage of total number of individuals recruited	%
Percentage of recruitment exercises that were successful in recruiting an individual	%
Acquisition Rate: Number of recruitment exercises as a percentage of organisational AFTE's.	%
OCCUPATIONAL HEALTH & SAFETY
Cost of providing the Occupational Health and Safety service as a percentage of total HR expenditure	%
Occupational Health and Safety AFTE's as a percentage of total HR AFTE's	%
Cost of providing the Occupational Health and Safety service per total organisation AFTE's	$
Number of claims paid as a percentage of total organisation AFTE's	%
Cost of providing the Occupational Health and Safety service per number of claims paid	$
Average number of working days lost per accepted claims	days
Average number of days spent by OH&S practitioners and consultants in training/promoting etc in relation to Occupational Health and Safety per no of claims accepted	days
Number of claims for manual handling injuries as a percentage of total number of claims lodged	%
Number of claims for stress as a percentage of total no of claims lodged	%
Number of claims for occupational overuse syndrome as a percentage of total number of claims lodged	%
Number of claims for travel to/from work as a percentage of total number of claims lodged	%
Premium rate as a percentage for 1993/94	%
HDA ADMINISTRATION
Cost of providing the HDA administration service per total organisation AFTE's	$
Cost of providing the HDA administration service per HDA transaction	$
Average number of HDA transactions per organisation AFTE's
Average monetary value of HDA transaction	$
Average HDA administration time spent per HDA transaction	minutes
LEAVE MANAGEMENT
Cost of providing the Leave Management service per total organisation AFTE's	$
Average cost of providing the Leave Management service per leave transaction	$
Average number of leave transactions per organisation AFTE
Average Leave Administration time spent per leave transaction	minutes
Number of leave related grievances as a percentage leave transactions	%
SEPARATIONS ADMINISTRATION
Cost of providing the Separations Administration service per separations transaction	$
Average Separations Administration spent per separations transaction	hours

Attachment J: MIAC project team members

MIAC Mentors

Peter Kennedy Public Service Commission

Ian Heath Human Services and Health

Dudley Martin Employment, Education and Training

Team Leader

Dominic Downie Comcare

Team Members

Steve Allen Administrative Services

David Anderson Defence

Karen Bail Defence

Erik Beens Industry Commission

Mike Cassidy Industrial Relations

Jim Collins Australian Customs Service

Ann Molloy Veterans' Affairs (SWIM placement)

Morris Wilson Social Security

 

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