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Dealing with misconduct: Is education more effective than force?

Australian Government Solicitor Employment Law Forum
29 November 2005, Canberra

Thank you for inviting me to speak to you today. I am very pleased to be here to talk at this forum – particularly in these times of rapid change.

Our hosts have invited me to speak about misconduct and whether force is more effective than encouragement in fostering compliance with the APS Values and the Code of Conduct.

Before I get on to that specifically, I’d like to talk a little about how we got to where we are today.

The first Public Service Commissioner, Duncan McLachlan, wrote in his first Annual Report in 1904 that:

“…I look at least (and with some degree of confidence) to all who occupy the higher positions of this Service to inculcate, by their own actions, in all under their control, habits of official virtue.” (p65)

As Commissioner, I can concur with my predecessor. But today, would such a comment be considered little more than a motherhood statement?

An important feature of the British system of civil service that we inherited is the clear rejection of patronage and the promotion of enduring principles of public service. These included principles of merit, apolitical neutrality, the provision of frank and fearless advice to the government of the day, accountability, impartiality and a focus on acting in the public interest.

But values and ethics, until 1999, had been implicit, not explicit. They were achieved through the application of specific rules, rather than through the understanding of concepts.

For just about all of the last century, centrally prescribed rules and controls – force - were considered sufficient to achieve high standards of conduct by Australian Public Service employees. But detailed rules, while they may provide a foundation for good process, do not necessarily ensure efficiency or compliance. Indeed detailed rules may provide the road map by which cunning players manipulate and step around those rules. Complicated central service-wide rules can also impose a transaction cost on the activities of government, at a time when our citizens expect us to work efficiently.

The way public servants work has changed a great deal. The Australian Public Service, and the public sector more generally, has undergone sustained, incremental reform for at least the last 25 years. This reform has enabled agencies to be more results-oriented, and to be more flexible and agile, more responsive to stakeholders and more innovative in use of technology.

A key challenge has been to find an enduring framework within which this greater flexibility can operate properly and confidently, consistent with the core principles of public administration.

Yet, even with the changes, the Government and community have made it clear they expect still higher levels of accountability and transparency in decision-making.

Public Service Act

The passage of the new Public Service Act in 1999 was an important milestone. It marked a shift away from centrally prescribed rules about employment processes to legislated principles, giving Agency Heads the flexibility to manage, while at the same time requiring me, the Public Service Commissioner, to evaluate agencies’ performance against the APS Values.

The APS Values and Code of Conduct are prescribed in law. Each Value is supported by more detailed Directions made by the Public Service Commissioner. Sanctions are available against breaches of the Code of Conduct including failure to uphold the Values.

Agency Heads are required to uphold and promote the Values, and the first two functions of the Public Service Commissioner spelt out in the Act are:

to evaluate the extent to which agencies incorporate and uphold the Values; and
to evaluate the adequacy of systems and procedures in agencies for ensuring compliance with the Code of Conduct.

I must also report annually to the Minister, for presentation to the Parliament, on the state of the APS.

The APS Values are part of our professional standards as public servants. They set out, in positive terms, the high level of behaviours to which we should all aspire and against which we will be held to account.

The Values are complemented by the Code of Conduct that serves as a disciplinary code specifying required behaviour. The Code is, in fact, an important part of our compliance regime.

Our current model sets a high level framework of principles which agencies must uphold and promote through their own systems and procedures. This framework is based on a reasonably well-embedded culture of implicit public sector values. And the framework—based on legislation and guidelines—contributes to the hardwiring of those values into the Public Service.

Coercion versus force

With the APS framework in mind, I now return to the question given to me - “Is education enough in ensuring compliance with the APS Values and Code of Conduct? Or how effective is force?”

If only the issue was so clear cut.

My view is that aspirational guidance alone will only direct the good and have no effect on deliberate offenders. It’s like preaching to the converted.

Similarly, at the other end of the spectrum, approaches based on legal means alone will fail. The usual goal of compliance programmes is to prevent, detect and punish legal violations. But organisational ethics and values-based management means more than avoiding litigation.

Providing employees with a legal rulebook will do little to address any problems underlying inappropriate culture or unlawful conduct. Compliance programmes rarely address the root causes of misconduct.

A focus on legal compliance on its own is unlikely to encourage much commitment to a values‑based environment. I am afraid that the law is not usually intended to inspire high professional standards or guide good practice.

It is equally sad that defining ethics and values as legal compliance could be viewed as implicitly endorsing a code of mediocrity. As a former chairman of the United States Securities and Exchange Commission noted a few years ago: “It is not an adequate ethical standard to aspire to get through the day without being indicted.” (Paine)

What is needed to foster a climate that encourages high standards of behaviour, indeed what we have today in the APS, is a strategic combination of standard setting and education, and legal regulation. Such a combination is referred to by the OECD as an ‘ethics infrastructure”. (PUMA/OECD 1997:12)

This approach combines a concern for the law with an emphasis on managerial responsibility at all levels and across all functions and locations. This approach is broader, deeper and more demanding than a legal compliance initiative.

John Uhr, in his recent book Terms of Trust, notes that: “The ethics approach to public conduct based on values and principles is balanced by the anti-corruption approach to enforcement and strategies for compliance with principles.” (2005: 202)

The effective embedding of values is not done through legislative means or executive direction alone. I share John Uhr’s view that: “you can’t legislate ethics.” He goes on to say that: “Rules are just the beginning: they can help frame expectations of official conduct but they can do little to motivate or sustain ethical conduct, which calls on the character of individual officials.” (2005:191)

When embedded into the day-to-day operations of an agency, however, the APS Values and Code of Conduct, acting together, can help to prevent damaging ethical lapses by guiding appropriate thought and action. In this way, the Values and the Code are not a burdensome constraint, but rather a powerful governing ethos for the APS.

Building values into how we go about our everyday work and reasoning, not only takes time but requires commitment from staff at all levels.

The OECD has argued that communication and training can do much to ensure that public servants internalise basic values, understand ethical issues, and develop the judgement and skills needed to deal appropriately with ethical problems. (OECD: 1997)

The importance of awareness raising, induction, training and follow up sessions cannot be overestimated. Nor can interactive discussions and practical learning. Ingraining values into the daily work of employees must be an ongoing, iterative process.

I am sure that we are all aware that it is much more cost effective to prevent fraud and poor behaviour than to punish it.

Education and awareness

In a recent study of progress made by Australian Public Service agencies in embedding the APS Values, the Australian Public Service Commission identified a gap in ethics training designed specifically for the APS. Consequently, in support of my statutory responsibilities to promote the APS Values and Code of Conduct, the Commission has developed the Being Professional in the APS—Values Resources for Facilitators kit that aims to fill that gap.

The kit is a comprehensive package of resource materials that will help agencies make the APS Values and Code of Conduct ‘come alive’ for employees. APS agencies or their agents will be able to build their own programmes that will guide employees in decision-making and workplace discussion of the APS Values and the Code of Conduct.

The materials aim to demonstrate how, for all of us in the public service, the APS Values and Code of Conduct are signposts that not only guide our own behaviour, but help us to manage the key relationships that make up our working lives: with the government and the parliament; with the public; and with each other in the workplace.

The kit includes my Key Messages for all APS Staff, which can be summarised as follows.

The APS Values and Code of Conduct are:

serious business – they are in law
real – they point the way to how we should behave and to manage key relationships
our professional standards as public servants
signposts to point us towards solutions.

Other forms of education and awareness-raising are also critical. The ANAO tells us, for example, that “fraud awareness raising and training underpins prevention and detection” and that “providing information to employees and customers on fraud detected, and action taken, indicates that there are consequences attached to committing fraud.” (ANAO: August 2004)

The prevention of misconduct, and resistance within organisations to threats of misconduct, are central to good governance and contribute to the integrity of the public sector. A prevention focus will seek to enhance the organisation’s capacity to resist corruption and misconduct, and not solely the particular conduct identified during an investigation.

State of the Service Report

As I have already mentioned, I report annually to Parliament on the state of the Australian Public Service. A major theme of my report to be tabled tomorrow, entitled the State of the Service Report 2004-05, is how agencies are embedding the APS Values and Code of Conduct in their governance systems and procedures and the culture of their organisations.

The report notes that, on the whole, the majority of employees feel that they are familiar with the Values and view them as relevant to their daily work. In addition, most APS agencies are directing a consistently high degree of effort towards embedding the Values and the Code into their processes and work culture in terms of induction and training.

A concern I noted last year remains however. Namely, that although the great majority of employees are confident that their immediate managers and colleagues act in accordance with the Values, they continue to have a lower level of trust in their senior managers.

Building trust in the APS is one of the issues I have identified in this year’s report. Building trust is important for all APS employees but particularly for the leadership group. Senior leaders have a vital role to play in establishing a supportive and professional culture and showing decisions-makers how to balance the APS Values.

Leadership

Ethical leadership is absolutely critical to achieving an organisation-wide commitment to good governance and the confidence of those outside who have dealings with the organisation.

Australian research conducted by the New South Wales Independent Commission Against Corruption (ICAC 1998) found that the ethical tone of an organisation affects efficiency and effectiveness, decision-making processes, staff commitment and job satisfaction, staff stress and staff turnover. The research also determined that strong, clearly stated values could guide people through choices, so that making ethical decisions was the path of least resistance. On the basis of these findings it was argued that making ethical practices a priority was not just about functioning with integrity or being credible; it was also about optimising the efficient functioning of an organisation.

Ethical leadership has become increasingly important for us all because we often need to operate effectively in a world where the choice is seldom between ‘right’ and ‘wrong’. Instead, we operate in an ambiguous environment where we have to choose between one ‘right’ and another ‘right’ or where the best option may be reduced to the ‘least worse’ alternative.

We all know that the world is changing constantly–becoming more complex and fast paced. The Australian community is more sophisticated and, quite rightly, has higher expectations of its government and services than ever before.

Today’s environment can create very real pressures. Like people, organisations are more at risk of getting it wrong when they are under pressure.

For the Australian Public Service, this means that our standing and reputation are at risk if we do not pay attention to institutional ethics. If the leadership group is seen to actively model and champion the Values, other staff in the agency will actively engage with them. And unless the leadership group models the Values then we cannot expect more from staff.

The importance of role modelling is reflected in the Public Service Act, which articulates the special responsibilities of agency heads and the Senior Executive Service in relation to the Values and the Code (Public Service Act sections 12 and 35 respectively).

Last month the Management Advisory Committee (MAC) released a statement of its expectations of the SES, in which it reinforced the role of the SES as ‘Values Champions’. In particular, the MAC stated that:

“Individual integrity and professional and ethical behaviour must be part of the common identity of APS leaders. It is critical to sustaining public trust and employee commitment, and attracting high calibre young staff.”

Good leaders model their organisation’s values and set the tone for the organisation in terms of ‘how things are done around here’. They promote the right culture for people to do their best.

Modelling the Values and the Code by leaders and those in positions of authority, however, is not enough in itself to motivate employees to engage with expected behaviours. Workplace discussion and coaching and mentoring, supported by guidance through class-based learning and development activities, are also critical in helping employees to develop the good judgement necessary to apply and balance the Values and the Code in their daily work, as I mentioned earlier.

Leaders need to engage with their staff at all levels to promote work-based discussion of the difficult workplace problems encountered by employees, so as to help them mature professionally. In the absence of clear rules and guidelines, it is also crucial for senior employees and other leaders to make clear their expectations of staff in terms of behaviour, beginning with an employee’s first day in the workplace.

Culture

In any organisation, addressing the underlying culture and clarifying the behaviours required is essential. If we can raise the general ethical standards of our public servants, we make it easier to identify those who are genuinely corrupt and fraudulent.

Culture is fundamental to how organisations work. Culture influences how people behave, how they communicate and how they accept or reject messages.

Dr Wayne Brockbank, Clinical Professor of Business at the University of Michigan Business School, defines culture as the shared ways of thinking that determine how people collectively behave and what information they collectively accept and use. An organisation whose culture cannot accurately perceive and interpret what is going on in its environment, such as the requirements of its customers or the technological alternatives it faces, will have great difficulty staying in business.

For the APS, our culture is underpinned by the APS Values and Code of Conduct. They articulate our operating ethos and set out our standards of behaviour. As I said earlier, they are our professional standards.

Culture is also important in terms of risk management. The Australian Auditor‑General reminded an audience recently that:

“To ensure that organisational objectives are being met, and priorities are being addressed in the manner agreed, an organisation-wide view of risks and controls is necessary.
In turn, such a view will reflect the culture, or ‘tone’, that has been set for the organisation by its leadership within its governance framework, based on a strong values/ethical commitment.”
(Ian McPhee: 2005)

Values are not just a management tool or a special type of management system that runs parallel to other systems. Rather, they are the beliefs, aims and assumptions that sustain the enterprise and guide its management in developing strategies, structures, processes, and polices.

I am not so naive as to accept that all of the 130,000 or so APS employees willingly embrace and model the values that we have set out in the Public Service Act.

I do consider, however, that the system needs values for guidance, that the values are real, that they must be modelled (particularly by leaders at all levels within an organisation), that organisations should nurture cultures that are consistent with the APS Values and that we should have (as we do) a mechanism to censure non‑compliance. If you have these elements then the application of, and compliance with, the values becomes second nature – and, indeed, the course of least resistance.

Behaviour

So what does this mean in terms of our behaviour? The APS Values cover a broad range of issues related to behaviour, but I want to focus on one; that the APS provides for “a fair, flexible, safe and rewarding workplace”. (PSA s 10(1)(j)) This value is central to our relationships in the workplace.

This Value calls for harmonious workplaces that are safe and harassment-free. It recognises that valuing the contributions of staff is a strong motivator of improved performance. Decisions on employment matters must be transparent, embody equity and procedural fairness principles and maintain appropriate confidentiality.

In addition, the Code of Conduct requires

an APS employee, when acting in the course of APS employment, must treat everyone with respect and courtesy, and without harassment. (PSA, s13(3))

This requirement is closely linked to valuing and encouraging diversity in the workplace, which needs to be based on respect for differences between employees. It operates in tandem with protections for employees under federal discrimination legislation.

Respect and courtesy

The Public Service Act does not define ‘respect and courtesy’, however Macquarie Dictionary definitions tell us that respect should be taken to mean ‘consideration or regard’ and courtesy to mean ‘politeness’.

Interestingly, there have been no court cases to help with interpretation of this element of the Code of Conduct, however there have been several cases in the Australian Industrial Relations Commission (AIRC), which give guidance. Drawing on these cases, it is clear that the standard of respect and courtesy required under the APS Code of Conduct is the general community standard, which is continuing to evolve. It is also clear that the standard is contextual i.e. it depends on the particular circumstances applying at the time.

These are highly important issues to bear in mind, especially when we consider how societal norms can, and do, change over time.

A failure to treat an individual or group with respect and courtesy occurs where a reasonable person, having regard to all the circumstances, should have anticipated that the individual or group would regard the action as disrespectful or discourteous. The sole test is not whether the accuser felt that he or she was not treated with respect or courtesy. It must be objectively reasonable for the person to feel so aggrieved.

A failure to treat someone with respect and courtesy can be both intended and unintended. It can also occur whether or not the aggrieved person shows signs of emotion or distress.

Generally, the more senior the employee the more they will be expected to exemplify the APS Values and Code of Conduct (and hence respect and courtesy) in their behaviour.

Examples of a failure to treat someone with respect and courtesy could be wide ranging. Behaviour that has been considered by the Australian Industrial Relations Commission or by the Merit Protection Commission to be a failure to treat workplace participants with respect and courtesy in the context of the particular cases concerned includes:

displaying a contemptuous attitude towards junior staff
attempted humour gained by diminishing the dignity of a co-worker
indirect behaviour such as making loud derogatory comments about other staff to a third person within earshot
making belittling or derogatory remarks that diminish the dignity of other staff in emails.

Increasingly, Australian courts and tribunals are finding that unacceptable behaviour in the workplace, including bullying, is grounds for dismissal or compensation.

In 2003 the Australian Industrial Relations Commission held that an APS agency was justified in dismissing a senior, long-serving, public servant because he had behaved in an ‘aggressive and contemptuous manner’ towards his co-workers. (AIRC case PR932560, Purser v Attorney-General’s Department 2003).

This case should encourage us all to deal directly and constructively with inappropriate behaviour in the workplace.

Image

I have said in other forums that I believe that the public service has an image problem.

We have a habit of attracting bad press when something goes wrong, in spite of our successes elsewhere, innovative ways of working and leading the way in many areas of reform.

The majority of public servants are hard working, committed and have intellectual curiosity. The best of them respond creatively to policy objectives and directions, yet they offer critical and constructive advice when they believe those directions to be flawed.

The majority of public servants also show a high level of integrity and demonstration of the APS Values. At the end of the day, less than 1 per cent of APS staff are investigated each year for misconduct.

Nevertheless, as an entity, it’s crucial that the APS strives for a good reputation. Put simply, this means that we:

should have respect for what we do
do our core business well
must manage stakeholders well
and behave well.

If we have respect and a good image, we are more likely to attract good people, including good young people, and to keep good people.

Our objective therefore should be to demonstrate success along with the highest ethical standards so that we can maintain the confidence of the public. Public trust in government and the public service is important for the effective creation and implementation of public policy and for the good of our country.

Review of the Public Service Act

Before I turn to my concluding statements, I should mention that the Commission has started a low key review of the Public Service Act framework. The focus of this review will be on whether it is possible to further simplify existing arrangements without compromising the integrity of APS management or accountability arrangements.

The review will not be seeking to change the current decentralised, values‑based approach to APS legislation. The APS Values are important and underpin the operations of the APS.

The Commission has already done a considerable amount of work in promoting the understanding of the APS Values, and the grouping of Values has made it much easier for employees to conceptualise their operation. One idea is to look at whether there is any capacity to streamline the current presentation of the values.

While we will be looking at the APS Values, I want to make it clear that the review is not about reducing the expected standards of behaviour and operating ethos of the APS or watering down its values.

Conclusion

Public servants occupy a unique place in our democratic society.

Meeting the demands of government and the expectations of the public, while fulfilling all the requirements of the law, is a constant balancing act which is not always easy to sustain. Having a set of Values, articulated and contained in legislation, provides the basic framework for understanding our obligations, while allowing the flexibilities that a rapidly changing environment demands. It may also underpin a more self-confident government and public service.

To complement a principles-based culture it is also necessary to have the essential foundations in place, such as fraud control and risk management procedures and appropriate governance systems, performance management and training. Leaders have a particular role in modelling the values, to promote such a culture across the entire organisation.

It is important to maintain an appropriate balance between APS Values that foster high standards of behaviour and a Code of Conduct against which suspected breaches can be investigated and sanctioned.

The APS Values and the Code provide a robust framework for guiding behaviours and decision-making. Paying attention to them and developing skills in balancing their inherent tensions, like many things in life, becomes easier with practice.

Of paramount importance though, is the role of leaders (down to the first level of management) in inspiring, motivating and developing their employees to practice and sharpen these skills, so they can make difficult decisions with confidence. While creating and promoting institutional integrity is one of the most important functions of leaders, all APS employees need the capability to act with the professionalism expected of them by the public.

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