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State of the Service Report 2007–08

Presentation by Nicole Pietrucha, Manager, Evaluation Goup for

Lynelle Briggs
Australian Public Service Commissioner
Darwin 23 March 2009

Introduction

Good afternoon everyone and welcome.  Before I begin I would like to acknowledge the traditional owners of the land on which we are meeting today.

The State of the Service report evaluates the performance of the Australian Public Service annually. In 2008 we saw a new government with an ambitious reform agenda establish itself; we became increasingly linked into global activities, notably the need to respond to the worsening global financial crisis; and the Australian community has continued to expect more and better from us. Clearly, we must keep up and make sure we’re one step ahead.

I will focus my remarks this afternoon on how the Australian Public Service must move forward and position itself well to meet these and future challenges.

Getting the workforce right

To start, I want to give you a quick snapshot of what the APS looks like, both nationally and here in the Northern Territory. Our workforce is the prime asset we have to make sure we can do our jobs and meet Government and community needs.

In short, we are now 160,000. The total ongoing workforce is 147, 598. As at June 2008, there were 2,890 APS employees in the Northern Territory, a little less than 2% of the total workforce. The majority of us in the APS are women—nearly 58%. The percentage is higher still in the Northern Territory at 62%. Amongst the ongoing workforce, 12.2% of us work part-time. In the Northern Territory, 6.3% work part-time. Nationally, our average age is 42. Here in the Northern Territory it’s 40. The SES is 1.8% of our workforce. 52% of us have graduate qualifications. Representation of Aboriginal, Torres Strait Islander and people with disability continues to fall.

Employee numbers grew by 3% this year, driven largely by initiatives from last year’s Budget. In the Northern Territory numbers grew by 21%. Nationally, growth has now started to slow due to Government policies, with the rate of new APS engagements in the second half of the year dropping considerably compared to previous results.

Of course, we cannot rely on a simple APS headcount to gauge how well things are going. We must look at the functions public servants are performing as well as considering the most efficient and effective ways to run the APS. If that means bringing outsourced services back in-house as we are now seeing with the Gershon ICT report, then ideology should not preclude this from happening.

Nationally, public servants are most likely to work in service delivery, corporate or regulatory areas. In the Northern Territory, a significant percentage of employees work in service delivery and programme design or management.

This year saw consolidation of a number of long-term trends in APS employment towards a more highly-skilled workforce. APS 6 is the most common classification (20.4%), followed closely by APS 4 (19.7%) and EL1 (16.7%). In the Northern Territory, as for the States, APS 4 is the most common classification (23%), followed by APS 6 (18.3%) and APS 5 (18.2%).

Service wide, there has been a continuation of the growth at higher classifications and continuing high levels of recruitment of people with graduate qualifications (about 60% of all recruits this year).

Consistent with a trend that has been evident for some years, the proportion of women in the APS continued to increase last year and they accounted for over 60% of the new entrants to the APS. Pleasingly, female representation continued to increase at senior levels, and women now account for 37% of the SES.

Our workforce data reveals that the ‘typical’ new starter in the APS this year is a 32-year-old female, with graduate qualifications, engaged at the APS 3 level, and working in service delivery outside Canberra. The ‘typical’ employee is a 42-year-old female, with graduate qualifications, working at the APS 6 level in a range of different roles across the country.

People join the public service for different reasons. I like to think that interests matching the job and making a difference are as important to us all as our fundamental commitment to serving the public interest, and more important in practice than job security, but I understand that job security and job location are important to all of us.

To compete for the best workforce, agencies need to market themselves as attractive employers and to attract employees with particular personal skills—flexibility, creativity and entrepreneurial skills—as well as specialist skills, including science, economics, ICT and accounting expertise.

It is encouraging that this year we have seen a large increase in agencies reporting that they have undertaken workforce planning for the next one to five years.

It is also encouraging that two-thirds of agencies reported that they reviewed their recruitment and selection guidelines during 2007–08, mainly with a view to improving the speed and flexibility of these processes, although—given that around half of selection processes were still taking over two months to complete—this is somewhat overdue.

Our future workforce must also reflect the broader diversity of the Australian community. Agencies need to develop more effective strategies to increase the representation and employment experience of people with disability, Indigenous Australians and younger people.

The long-term decline in employment of people with disability continued this year. There are some factors which may help explain this decrease—such as the reduction in number of jobs at lower classification levels and increased efficiency pressures—but the overall trend is very disappointing, particularly in light of the commitment that agencies made to boosting the employment of this group as part of implementing the MAC report Employment of People with Disability in the APS.

Despite some previous success with recruiting Indigenous employees, this was not sustained in 2007–08. There was a small reduction in the number of Indigenous employees during the year.  Although the proportion of Indigenous employees is much higher in the Northern Territory than elsewhere, numbers here also declined. It is of particular concern that Indigenous employees appear this year to be more dissatisfied with their APS employment experience than others and are more likely to leave the APS.  The separation rate for Indigenous employees has been higher than their engagement rate for all but two of the past ten years, and has been higher than their overall representation every year.

There has been strong support for the Indigenous Employment Strategy, but more effort is still required, including a look at the use of more targeted approaches and positions for Indigenous employees.

The representation of young people—those aged less than 25 years—continues to be much lower in the APS compared to the broader Australian workforce. The situation is the same in the Northern Territory. It is important for the ongoing vitality and sustainability of the APS that it is an attractive employment option for both young women and young men, and that we build new jobs that are flexible and responsive to the needs of an ever changing workforce.

I am delighted this year that overall we again saw high levels of job satisfaction and pride in working in the Australian Public Service. While times are tough in many agencies, most public servants are happy with their work-life balance, proud to work in the APS and would recommend the APS as a good place to work. We have a lot to be proud of.

If we look at outcomes against the top four factors, we find similarities, although the relative rankings amongst these job satisfaction attributes vary between the APS-wide results and the Northern Territory. Whilst satisfaction with the attributes is high for good working relationships, flexible working arrangements and good manager, it is much lower for remuneration.

As I said earlier, I want to spend some time today looking at future directions for the APS. To cement our place in the future, we need to get our workforce right and move forward in a number of areas.

Embedding ethics and integrity

Under the Westminster system of Government, citizens have a right to expect that public servants will observe the highest standards of ethics and integrity when using the powers and resources granted to them. The Rudd Government made it clear that it expected a reinvigoration of Australia’s Westminster tradition and has implemented a range of initiatives to support this goal, including:

• the introduction of open, merit-based selection processes for agency heads and statutory office holders
• a revised set of Standards of Ministerial Ethics
• a code of conduct for ministerial staff
• a code of conduct and register for third party lobbyists, and
• freedom of information and public interest disclosure measures are still in prospect.

In light of these new measures we took another look at the relationship between the APS and Ministers and the Parliament in this year’s State of the Service Report.

We found some very interesting results.

One of the most significant findings was that of the 17% of public servants who had had contact with Ministers or their advisers in the last 12 months, only 20% reported that they had faced a challenge in balancing the need to be apolitical, impartial and professional, responsive to government and openly accountable. This represents a dramatic fall from the 33% recorded in 2004–05 when we last tested this.

The Government’s measures undertaken to reinvigorate Westminster, along with the smaller proportion of staff who reported having direct contact with Ministers and ministerial advisers in 2007–08, and the significant fall in the number of ministerial advisers under the Rudd Government would have contributed to these results. So too, the work of the Commission and of individual agencies in helping public servants to be more confident in balancing the APS Values.

More agencies are reporting they have protocols in place to assist staff in resolving any concerns about the nature of requests from ministerial offices, although more can be done to alert relevant staff about their existence.

One of the key features of the modern Westminster system is clear standards of behaviour and professionalism that public servants understand, and comply with. The APS Values and the Code of Conduct provide the framework for our standards of behaviour and professional conduct.

This year there were generally high levels of confidence among staff that their leaders and colleagues behave with integrity. There were very few instances of actual misconduct. These results are similar nationally and in the Northern Territory and are excellent by any objective standard, including international comparisons.

But we cannot be complacent. We must have in place systems, processes and training to ensure that public servants know and understand their ethical obligations and make sure they will always make the right ethical decisions. It is all too easy for “the way things are done around here” to become the accepted standard, rather than what is right, what is expected by the community, and what is actually expected of public servants working in the national interest. To my mind there is room for a new ethics educational drive to reinforce high standards of public service integrity.

Improving ethical decision making in the workplace turns on the role of agency leadership because they set the benchmark for “the way things are done around here”. As a key element in a renewed ethics campaign, I want to encourage our leaders to be more proactive in promoting ethics in the workplace. They need to talk with staff about how to handle ethical challenges in the workplace and discuss what can happen and how to behave.

In May this year the Government will establish an Ethics Advisory Service to assist public servants make the right decisions.

As we work more closely with State and Territory Governments, we will also have common ethical issues to deal with. There is a strong case for a common set of core ethical standards and principles across the country.

Improving APS performance

In considering how to improve our agencies’ performance, we try to learn from others and benchmark our performance against the best around. It’s my job to report on the state of the service and how agencies are performing and help them improve in particular areas, especially leadership, the Values, governance and employee engagement.

Employee engagement is viewed as critical to achieving a high performing, responsive public sector organisation.  Agencies that want to be highly performing and deliver excellent client services need to understand what drives employee engagement.

This year the Commission focussed on agency performance in terms of employee engagement. We analysed responses to a range of key questions, allowing us to see how public servants feel about their organisations, the contribution they make and whether they are committed to the agency’s future. We can also use our survey results to analyse specific agency performance. Using factor analysis, the chart shows us how employees perceive a range of factors in the APS.

Broadly, the results showed that most APS agencies are performing well in employees’ understanding of the job, work motivation and the way people interact with their immediate manager, work group behaviour, productivity, and work-life balance. The highest performing agencies, however, scored much better than other agencies in the areas of senior leaders, agency culture, merit, learning and development and reputation. Conversely, the worst performing agencies tended to have poor results in most of these areas.

Interestingly, the analysis also suggests that it can be easier for smaller agencies to perform better, presumably because of the closeness of management and staff.

The message is that if you want to improve your agency’s performance in terms of employee engagement, focus more on senior leadership, agency culture, merit, learning and development, and innovation. Taking this a bit further, given that staff engagement correlates closely with the level of customer or client satisfaction, if you want your agency to be highly performing and to deliver excellent client service, then you should deal with the employee engagement factors of the sort identified.

Large agencies can use their own employee survey results to review where they may be doing well, but also to identify and address specific issues in their agency.

Over half of all SES and EL2 employees in the APS consider that more streamlined administrative processes within their agency is the single most important action that would assist their agency to achieve greater efficiency and effectiveness. Agencies have scope to achieve considerable gains through governance reforms designed to streamline their internal rules, guidelines and processes, whilst not diminishing the areas of accountability, and through better communication and devolution of decision making.

This year’s report shows that there is a need for some agencies to improve their performance in particular areas such as employees’ perceptions of merit in employment decisions, managing unscheduled absences and improper use of ICT.

One area we clearly need to tackle is the rising level of unscheduled absence across the APS—which went to 10.1 days per person this year. Although a certain level of absence is a normal feature of a healthy workplace, managers must take responsibility and be held accountable for fostering an attendance culture. Unscheduled absences are a lead indicator of employee dissatisfaction in many agencies. Effective management is the most cost-effective way agencies can reduce unscheduled absence, especially when good managers create and foster a team culture where employees are committed to the organisation and their jobs.

Agencies’ capacity to improve performance is also linked to their financial circumstances. For well over a decade now, agencies have had to make considerable cost savings to fund wage increases—around 2% per annum over wage cost indexes. They have also had to find cost savings to meet the ongoing 1.25% efficiency dividend, and since March 2008, an additional one-off 2% efficiency dividend.

Over the last decade, average labour productivity in the Australian economy generally has increased by 1.4% per annum and by 1.7% per annum in the market sector.¹ Although a direct comparison is not possible, the total cost savings that are required to be made each year by every agency in the APS are substantial—over 5% in 2008-09—and compare very favourably with annual labour productivity growth in the economy more broadly.

At the time of the survey, many agencies reported that it was too early to assess the full impact of the additional efficiency dividend. However, the majority of agencies indicated that it had already had an impact; most commonly a reduction in staffing levels and increased working hours for existing employees. Other effects were: longer customer service waiting times; reduced service standards for some customer activities; training being postponed; and a reduction in some programmes.

While use of an annual efficiency dividend and partial supplementation for wage increases have been an integral part of shifting APS culture to one that focuses on efficiency and effectiveness, it may be time to consider whether uniform across the board approaches are impacting adversely on agencies, particularly the smaller ones.

To ensure that they continue to improve their performance, agencies need to be able to measure it objectively. A service-wide look at how agencies are faring in total and whether they are performing well in all their functions would be timely.

There is also a need to consider service-wide approaches to improve performance. The Government has signalled its intention to establish co-ordinated procurement for the APS in a number of specific areas. There are likely to be other areas where more co-ordination of activities across the APS will bring benefits to the service as a whole. I have already spoken, for example, of the need for a service wide commitment to ongoing learning and discussion around ethical issues. Other possibilities would be more co-ordination of leadership development and more co-ordinated administrative approaches, such as employee security checks.

Service-wide productivity growth of well over 3% per annum on average is built on high levels of personal productivity improvement.  Nationally, 61% of employees reported that their productivity had improved ‘somewhat’ or ‘markedly’ in the last 12 months. The result was higher still in the Northern Territory (67%). To maintain or increase their productivity in the next 12 months, most employees identified: good working relationships with their manager and colleagues, working to realistic performance expectations, and access to the information and resources needed to perform their job.

While many of us have reported productivity improvements, we are starting to see signs that employees are expecting to see greater recognition of this in their remuneration packages, with more and more people saying it is important to their job satisfaction, but fewer saying they are satisfied with what they are receiving.

It’s good news that employees generally hold positive perceptions about their immediate manager’s performance. There are also positive signs in the area of performance management, although there is scope for improvement. While most employees are receiving formal individual feedback, fewer believed they receive adequate feedback on their performance and supportive training to enable them to deliver the required results.

 Employees continue to report lower levels of satisfaction with the way their manager deals with poor performance. This is an area where there is wide variation by agency in employee perceptions of how well their particular agency manages poor performers. This suggests that this issue can be addressed and that there are steps that can be taken to improve employee perceptions in this area—the obvious ones being constructive working relationships combined with ethical decision making.

To support individual productivity, agencies need to continue their strong investment in learning and development, even as financial pressures increase.

Learning and development is an area often targeted for reduction when agencies are being asked to cut back on their expenditure. Agencies may need to become more strategic and targeted in the types of activities they offer employees, but they should not reduce expenditure on learning and development lightly.

As a group, employees working outside the ACT this year reported that their learning and development needs were being met at much the same levels as for those in the ACT, and this was also true for the Northern Territory (62%, as opposed to 55% APS-wide).

A Unified, Highly Professional APS

As part of the Government’s vision for the APS, the Prime Minister spoke of the need for ‘a professional public service that is committed to excellence.’ The measures I’ve mentioned which are aimed at restoring the traditions of Westminster will help to bolster our professionalism, as will sound governance structures and strong, ethical leadership.

The Senior Executive Service has a key role to play in building professional excellence across the public service. There are three common pillars which underlie effective leadership strategies across the world, and in the Australian Public Service they are:

• a cohesive senior SES leadership cadre that supports work across the whole of government and collaboration with a range of stakeholders, particularly citizens and communities and the States and Territories
• investment in APS wide leadership development for the SES and SES (executive level) feeder group, and
• systematic and integrated succession management planning, involving the identification and development of talented employees at all levels.

A united and connected APS-wide leadership group is essential if senior leaders are to be effective in seeing the bigger picture, juggling complex policy priorities and communicating a clear sense of purpose and direction. It’s therefore worrying that only 40% of the SES definitely identified this year as part of a broader APS leadership cadre. This is clearly an area where the SES needs to get its act together.

We need to renew the focus on what unifies us as public servants—to rebuild the concept of ‘one APS’. A key historical strength of the APS is that staff have been encouraged to pursue their careers across portfolios—gaining experience and depth of knowledge and understanding about government processes, and differing environments. This mobility, underpinned by a sound and consistent classification system, is vital to building a professional and collaborative APS that shares a common identity, and it must be rejuvenated.

For that to happen, impediments that may be limiting employee mobility across agencies need to be tackled, including consideration of whether remuneration may be impacting adversely on employee mobility.

It’s clear to everyone that agency-based agreement-making arrangements have delivered significant productivity gains in the APS and an increase in salary dispersion under a devolved system is a natural consequence, but I fear that it may be impacting on the concept of the APS as one career service.

Remuneration is one of the top ten factors that people consider when making the decision to join the public service or to move between agencies. We are starting to see signs that APS mobility may be influenced by pay differentials between agencies to the detriment of medium to lower paying agencies. Overall mobility rates among agencies fell in 2007–08.

A key issue is how to ensure the APS operates in a sustainable way so that agencies of all types and sizes can attract and retain staff with the capability to deliver on core agency functions.

Smarter policy

The Prime Minister places a high priority on good long-term policy work. He has emphasised the need for a robust, evidence-based policy making process, driven by analysis of all the available options and involving cross-sector collaboration.

Modern policy work involves tackling complex issues like climate change, terrorist networks and world financial crises; being able to see linkages across different but related areas; lots of work with third party players and other jurisdictional players; and some educated and risk assessed policy steps into the unknown if we are to devise smart solutions that will work.

The APS needs to make better use of field research, pilots and trials to understand how people and organisations are likely to respond to policy and regulatory interventions.  Critically, policy development and evaluation must also be informed by on-the-ground intelligence about operational issues and the views of those implementing the policies and regulations around the country.

New APS capabilities are called for.  We need leaders who exhibit a certain entrepreneurial style—people who understand what needs to be done and can recognise opportunities and act on them to get results.

Investment is also required to address the shortcomings frequently identified in the skill base of APS leaders, around strategic thinking, people and change management.

More than 80% of APS employees who had worked directly with people from other government agencies indicated that their agency culture encourages a constructive approach to collaboration with public service agencies.

However, the decline in employee perceptions about being able to resolve conflicts or to foster teamwork and collaboration are matters for concern. This suggests that an increased focus by agency leaders on promoting and supporting sound relationships with external stakeholders is required.

Moving Citizens to the Centre and Encouraging Innovation

Moving citizens to the centre of service delivery and design is a common theme emerging in many countries. No doubt this is an issue even more prominent for those of you involved in direct service delivery.

We should be striving to make sure:

• government becomes more approachable, with services that are easy to locate and understand
• citizens can choose service models based on their needs without having to understand which agencies deliver which services, and
• diverse transactions can be grouped and completed together.

This means we will have to change how we manage and deliver services. I think it will also mean cultural change for many of us.

Public sector innovation is important because it helps APS agencies respond better to complex policy issues, to create public value, and to improve the responsiveness of public services to citizens needs. Innovation, together with flexibility and nimbleness are essential ingredients in building the APS’s capacity to design and implement responses to citizens that better meet their needs and minimise the impact of governments on them.

Our research shows that the APS has a way to go when it comes to creating an innovation culture. When asked specifically about whether an employee’s agency encourages innovation and the development of new ideas, nearly 70% of the SES agreed compared to 49% of EL employees and 45% at the APS 1–6 levels.

SES employees also felt that they had much more opportunity to be innovative and creative at work, with only 10% disagreeing, compared to 22% of ELs and 21% of APS 1–6 employees disagreeing.

The current disparity between employees’ views about their capacity to be innovative, and the support provided to them by agencies and senior managers for adopting new approaches needs to be addressed. This must involve better alignment and recognition of the need to develop evidence-based policy, trialling new approaches, and learning from both failures and successes.

I would like to conclude today by emphasising that we all have a substantial reform agenda ahead of us. Your jobs in the Northern Territory, often at the forefront of service delivery and collaboration with other agencies or sectors will continue to be at the cutting edge of moving forward in the directions I have talked about today.

I urge you to make the time to look closely at this year’s State of the Service Report—and consider what it is telling us about the public service overall. Agencies should consider it a key resource for helping to position them well to move forward.

Thank you.

 

1. Average calculated using data from ABS, Australian System of National Accounts, 2007–08, Cat. No. 5204.0, ABS, Canberra, <http://www.abs.gov.au>

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