State of the Service report 2008-09 - WA

Introduction

Good morning everyone and welcome.  Before I begin I would like to acknowledge the people of the Noongar Nation as the traditional owners of the land on which we are meeting today. 

The State of the Service Report is much more than a formal reporting obligation. It is both our window and our crystal ball. Through it, we look at how the Australian Public Service has been performing over the last year, and we also try to anticipate what the key performance challenges will be in the coming years. It is an invaluable document, and is recognised as such throughout the world.

With respect to our future, as you all know the 2009 report is being launched on the cusp of a reform process that is geared to preparing the Australian Public Service to meet the challenges of the future.  Critical to the reform will be building our future skills and capabilities - things like agility, collaboration, and talent management.

We don’t need the State of the Service Report to tell us that our operating environment is changing and challenging. The pace of government decision making is accelerating and policy problems - things like climate change, water supply, Indigenous disadvantage or a number of issues related to changing power structures across the globe and trading patterns in our region - are more complex and often global.

There are increasing expectations from the public and from Government about the speed, range and quality of services and exports that they receive from the public sector, and after some years in which resources seemed reasonably abundant as we benefited from sustained economic growth and the resources boom we have a tight fiscal environment which is likely to persist for some years.  We will need to remain focused and efficient to maximise the outcomes we achieve for the citizens of Australia.  

These forces are elements of the environmental scan that have informed the thinking of the Advisory Group on APS reform that Terry Moran chairs.  The group has yet to report – and the government has certainly not had any opportunity to reflect on its recommendations – but the process that the group has followed has given us all an opportunity to reflect on what we do well as a public service and what we could do better in order to respond to the emerging and changeable needs of our country.

The issue is about continuous improvement and how best to position the APS to be “ahead of the game”.

We all know that the APS is not “broken”. The KPMG Benchmarking Study commissioned by the APS Reform Advisory Group testifies to this, as does the international comparison of us in the OECD’s new Government at a Glance report.  

This year’s State of the Service Report, which has provided an essential underpinning of the work of the Advisory group confirms our solid foundations.

By way of example:

• We have high levels of staff commitment - 87% of APS employees and 83% of employees in Western Australia are highly motivated
• Job satisfaction is relatively stable across the APS at around 80% which is similar to the result for APS employees in Western Australia.
• There is particularly strong commitment and motivation from our SES to meet the policy aspirations of government. A very high 97% of SES employees are highly motivated identifying the opportunity to make a difference as the key factor for them to go above and beyond.
• On the integrity side, there are continuing high levels of awareness of, and confidence in applying, the APS Values and Code of Conduct.  Also there are reduced numbers expressing concern about being able to be apolitical, impartial and yet responsive to government.

• The SOS report also shows that there is both a desire and a commitment by staff to work across organisational boundaries, and over 90% of staff want to learn about new things and ideas
• New technology is increasingly being used to facilitate interactions - 26 agencies reported using social media tools to engage with stakeholders.
• Finally, there is a continued trend towards being increasingly well educated - 68.1% of employees engaged had graduate qualifications, the highest level for 20 years.

So we have reason to be proud of our efforts and our institution, but the report is not just about telling the good stories. It also enables us to shine a little light on some areas where we need to improve.  And the linking theme is that building workforce capability is critical to the future success of the APS.

Very briefly, three things stood out in terms of the challenges ahead. They are how to secure

1. Improved strategic workforce planning
2. Improved leadership and employee engagement within a values driven framework; and
3. Improved cross government collaboration.

The evidence is clear. If we can build our capability in these three critical areas we will build the foundations for a more agile public service that can respond to rapid change and, at the same time, deal strategically with the more complex intractable policy problems.

APS Trends

Before turning to these three key areas, I would like to briefly examine the APS workforce profile and that of Western Australia in particular.

As at 30 June 2009 there were 162,009 APS employees, of whom 5.1% were here in Western Australia. The growth in APS numbers slowed compared to the previous year (from 2.8% in 2007/08 to 1.4% in 2008/09) as agencies adjusted to an increasingly constrained budget environment.  Growth in Western Australia was even more constrained, with numbers falling for the second consecutive year – employment fell by 2.3% last year after a decline of 3.4% in the previous year.

As noted earlier, our workforce is becoming more educated.  53.8% of ongoing APS employees overall have graduate qualifications which is just a little higher than the figure here in WA (47.2%).  However 68.1% of new entrants had graduate qualifications so this proportion should continue to rise in years to come. 

The slide shows that our classification profile is also continuing to shift upwards - with fastest growth last year at EL classifications in both the national and Western Australian data. In fact the EL cohort in Western Australia grew by 8.2% last year, despite the overall fall in numbers; and the SES increased also, though more modestly.

Diversity

We continue to employ increasing numbers of women, who now represent nearly 58% of all APS employees.  In Western Australia, the proportion is similar at 60.4%.

The ‘typical’ new starter in the APS in 2009 is a 31-year-old female (let’s call her Sarah because that is the most popular name amongst new female starters).  She has graduate qualifications, and was engaged at the APS 3 level.  The ‘typical’ APS employee is a 42-year-old female.  Let’s call her Susan, because that’s her name, with graduate qualifications, working at the APS 6 level.

Our record in other areas of diversity warrant further attention.  As this slide shows, representation of Indigenous employees in the APS remained constant at 2.1% (the blue line).  However, we have much to do to meet the new COAG target of 2.6% by 2015.  Indigenous representation in WA was maintained at 2.8% in 2009.

As we see from this slide the proportion of employees with disability continued to fall in 2009 to 3.0% (the blue line) for the wider APS and 3.3% for Western Australia.  The national trend is even more stark at the SES level.

This isn’t just about numbers. Creating and sustaining a diverse workforce ensures the APS reflects the composition of the Australian population, has access to the full range of talent available in our society and is better placed to effectively engage with and respond to the demands of all our citizens.

Mobility

There seems to have been a change in mobility patterns across the APS in recent years.  As a result we need to consider whether enough of our employees are getting a sufficient breadth of experience as they progress through their careers.

Mobility directly contributes to a richer and more broadly based set of skills, provides cross pollination of ideas and helps feeds collaboration. It impacts at both the individual and agency level, and the APS as a whole (and those who it serves) are the beneficiaries.

The 2009 report shows mobility between agencies fell again in 2009, after several years in which total mobility rates had risen.  The fall off is particularly marked in the rate at which transfers have occurred.

There has also been a steady decline in the number of agencies that senior APS employees have worked in. In particular, the proportion of EL employees who have experience in four or more agencies has halved over the last 10 years. There is a strong argument that these downturns must be reversed. Our future workforce capability may well stagnate if they aren’t.

In relation to the types of work that APS employees are doing, the largest number continues to be engaged in service delivery, although this fell to 20% from 24% last year. 

As you might expect policy work is more heavily concentrated at the national level.  We have a good track record in policy advising over a prolonged period.  Yet feedback to the Advisory group from a range of sources has been that we should seek to strengthen our capacity for creative strategic policy analysis and development.  This is a challenge that the Advisory group will need to address.

A reality of life in this area is that these skills are required to a greater or lesser extent over time, depending on the needs of Ministers and the nature of the problem that society is confronting at the time, yet the APS needs to have nurtured and developed these skills – and to have thought about emerging issues in advance - so that we can advise Ministers appropriately as needs change.

You may have noticed from the pie chart that the APS in WA has a stronger representation in regulatory work – indeed, at 22% of the workforce this represents twice the share in the APS workforce nationally.  In case you’re wondering this reflects the scale of the presence of Customs, AQIS and ATO; and smaller bodies like the National Offshore Petroleum Safety Authority and the National Native Title Tribunal, both of which have their headquarters here.

So we know what we look like, let’s look at where we need to focus our attention to build our workforce capability.

1. Strategic workforce planning

A key challenge that APS agencies identified to building workforce capability in their responses to our survey for the SOSR was the ability to attract and retain appropriately skilled staff.

The Prime Minister reiterated this point last year when he gave his John Paterson Oration. He spoke of the importance of attracting, training and retaining the very best people.

He went on to say that:

“The APS must have its proper share of the nation’s most talented people, because…the challenges facing government are tough, intellectually demanding and important for our nation’s future…only by hiring and promoting the best people can we solve the great challenges of our time…”

This need to recruit and retain becomes even more pressing when you consider the aging profile of the APS.  The median age of the APS has risen by 11 years over the last twenty years. In the next five years 45% of SES and 30% of EL employees will be eligible to retire.  And of even greater concern is that over the next 10 years, 70% of SES and 45% of EL staff will be eligible to retire.

Effective workforce planning is a tool that agencies and the APS as a whole can employ and identify potential skill shortages and put in place strategies to address these shortages before they become so problematic that they undermine business operations.  Effective workforce planning can help to shift agencies from a reactive approach to a long-term strategic approach to managing their workforce.  

How well is the APS doing in terms of workforce planning? Let’s see…

This year’s findings indicate that an increasing number of agencies are implementing policies, strategies and/or frameworks in recent years to ensure that they have the skills and capabilities needed for the next one to five years.

There is a bit of a decline in 2009.  However it is possible that the decline may be due to the inclusion of the additional response category this year, ‘being developed’.  This was nominated by a further 24% of agencies.

We also know from the 2009 results that around one-third of agencies have a formal workplace plan.  All 30 agencies with an agency-wide documented workforce plan indicated that it had helped them meet their business priorities. Twenty-five of these agencies report that their plan assists in meeting business priorities by identifying workforce risks.

What is encouraging is that the 30 agencies with an agency-wide documented workforce plan employ more than half the APS employees (53%).

It is important that agencies continue to give priority to developing strategic workforce plans that identify the key workforce risks and skill gaps early enough to set in place mitigation strategies to manage the risk.

The results of the 2009 State of the Service survey indicate that skills shortages continue to be an issue, although in some cases the shortages were less than in previous years (eg IT and Accounting).

Nevertheless, the most acute shortages continue to be felt in the key areas of ICT, accounting, and financial management skills.  Interestingly, given the feedback we have received about strategic policy capability, the shortage of high-level policy/research skills continued to grow this year.  So too did the unmet demand for employees with skills in contract management and economics. 

Nearly one-fifth of agencies are reporting shortages in HR skills with a moderate or severe impact on capability, which is problematic given that developing human capital is almost certainly to be an important part of APS reform.

2009 has seen some positive results from adopting an APS wide approach to tackling skill shortages.  I’m referring specifically to the work that is underway in response to the Gershon review which is helping agencies better manage their ICT workforce through a whole of government strategic workforce plan.

This initiative will provide us with a valuable insight into ways to better manage APS wide skills shortages in the future.  It is important that the APS more systematically addresses skill gaps through more targeted recruitment – and good strategies to develop and retain talent.

Some agencies are also actively managing skill shortages. For example, Centrelink has initiated a “skills tagging” project to improve its capability to identify its employees’ skills and experience.  This will enable Centrelink to direct work to employees with relevant skills, as well as identify those who may benefit from exposure to new work experiences.

The number of agencies with active talent management strategies has grown from 6% to 8% over the last year.  Talent management is a systematic approach to identify the development needs of individuals with promise and then provide learning and development opportunities – which is best viewed as a holistic approach ranging from training/courses to mentoring and placement in new areas etc.

Also there has been a notable increase in the number of agencies reporting  that they engage systematically in succession planning - a 10 percentage point increase on the previous year.

Recruitment

Getting the right people into the job as quickly as possible is not simply good practice and an effective way to build an organisation’s reputation for being efficient and people-focused, it is also critical to building timely workforce capability. 

As you can see from the slide, the average time taken for agencies to finalise a selection process and offer someone a job varied markedly across the APS - from 21 days in one agency to 142 days in another.  Since each of these is itself an average of the performance within an agency the range of times taken in practice is wider than this.  These results indicate that there is significant scope for improvement by some agencies.

The message from our discussion over the last few minutes is clear. We know that strategic workforce planning is pivotal, and we can see where some of the holes are that we need to plug. It won’t happen though unless we make human capital and its strategic management a key priority – one that ranks equally with quality service to government and clients or effective financial management because all of these outcomes are achieved by and through people.

The quality of leadership of organisations, the nature of their workplace culture and the effectiveness of their systems to recruit, manage, motivate and empower people are the keys to success.

2. Strengthening leadership and building employee engagement in a values based framework

Leadership

Excellent leadership is particularly important in time of change and uncertainty. It is leaders who must translate future aspirations into day-to-day behaviours and actions of  their employees.  It is leaders that build organisational capability by articulating organisational direction into clear goals, vision into practice, and purpose into process.

Responses to the 2009 SOSR employee survey indicate that less than half of employees are satisfied with their senior leaders based on the Senior Leaders factor (43%).  Interestingly they are generally content with the performance of their immediate supervisor.

This result is consistent with the perceptions of senior leadership in number of other sectors.  Perceived wisdom is that it may in part reflect the fact that employees do not have direct and regular contact with their senior leaders and may be unsure in rating their leaders’ performance. 

Having said this though, it is still something that we need to examine more closely because there is marked variation in satisfaction levels with senior leadership across APS agencies – satisfaction ranges from 16% to 77% across APS agencies.       

This suggests that there are good or better practice examples that could be studied and lessons shared around so that we can lift our average!  And lifting our average leadership performance is a goal well worth pursuing.

When APS employees were asked about what actions would assist their agencies to prepare for the future, they identified better leadership and improved engagement with staff as one of the most important actions.

Employee Engagement

Indeed, good leadership is the key to engaging employees with the business of the organisation. Senior executives set the tone of the organisation whatever its size.

Being engaged is more than just being satisfied or motivated. Engaged employees have a sense of personal attachment to their job and organisation that means they want to give of their best to help it succeed. Engaged employees will go the extra mile – above and beyond what is normally expected.

Agencies with an effective leadership can establish workplaces that promote high levels of employee engagement and will reap the benefits that go with it.  In the public sector these benefits include increased trust and service excellence. 

High levels of employee engagement are being pursued by both private and public sectors as it is a key component for ensuring a high performance workforce and the best outcomes for citizens. 

The UK government is investing in employee engagement programs across its civil service in a bid to build a workforce that is able to respond more quickly and flexibly to the rapidly changing demands of an increasing complex public sector environment.

The Commission has been assessing employee views on their workplace for a number of years through the State of the Service employee surveys.

Over the last few years statistical analysis has been used to identify those factors that give a summary picture of how the APS is going in the area of employee engagement.  In 2009, for the first time, an econometric technique called factor analysis has been used to identify 14 workplace factors that are drivers of employee engagement in the APS.

This slide shows levels of satisfaction with the 14 drivers of employee engagement across the APS in the 2009 (blue bars) and 2008 surveys. 

Satisfaction is highest with those drivers at the top of the graph (such as goal clarity, team performance) and lowest for those factors at the bottom of the slide.  

You’ll notice that less than one in two APS employees are satisfied with their remuneration, feel properly recognised and valued for their contribution, are satisfied with their senior leadership or are satisfied with their opportunities for career progression. 

When you look at that slide, it is clear that many of those things that directly matter - things like goal clarity, recognition, autonomy, learning and development opportunities - are aspects of the work environment that the immediate manager and senior leadership of an organisation can control and influence.

Ultimately effective leadership and high levels of employee engagement need to rest within a values based framework.  In the APS this values framework is the APS Values and Code of Conduct.

The APS Values

The APS Values are a core element of who we are as public servants – how we engage in our work and how we engage with each other. The Values and the Code of Conduct define the APS operating ethos and the standards of behaviour expected of every APS employee.

The Values also define our relationship with Government and our relationship with the public. They provide the context for how we provide advice and deliver services. In our case, when we look for a unifying, Whole of Government cultural framework we turn immediately to the APS Values.

The fundamental and underpinning role of the Values is why each year we measure and report on how well we perceive we have embedded them into our every day culture and practices.

International benchmarking indicates that the APS does very well in terms of achieving political independence and earning the public’s trust. It is heartening to see the 2009 results confirm that we have good reason to be proud of our culture and ethics.

There continued to be very high levels of awareness of, and confidence in applying, the APS Values and Code of Conduct.

Ninety-two per cent of APS overall and 91% of West Australian employees tell us that they are familiar with the APS Values and 93% reported familiarity with the APS Code of Conduct (92% in Western Australia).

The report also showed that employee perceptions of standards of ethics and integrity in the APS are high:

• 72% of APS employees agreed their agency operates with a high level of integrity (79% in Western Australia)
• 82% agreed people in their work groups treat each other with respect (76% in Western Australia)
• 78% of APS employees agreed their manager demonstrates honesty and integrity (75% in Western Australia)
• 71% agreed people in their agency manage conflicts of interest effectively (81% in Western Australia).

This year as I alluded earlier, 24% of SES/ELs, reported that they felt challenged with balancing the need to be apolitical, professional yet responsive to government. The APS result is similar to last year but, pleasingly, it is significantly lower than the 41% in the 2003-04 and 2004-05 surveys.

It takes constant vigilance by leaders and managers at all levels to ensure that the APS Values are deeply embedded in the culture of agencies so that all employees instinctively act in conformity with them, no matter how novel or unfamiliar the circumstances – and no matter who is watching (or not). 

Many would argue that values are caught, not taught ie that our actions speak louder than our words and are far more persuasive.  That is true.  But awareness raising and explanation are also important.

Induction programs are a particularly important opportunity and a relatively easy area for agencies to make gains to establish an appropriate baseline of understanding and expectation about what it means to be a public servant and how one should conduct oneself. Targeting new employees is an excellent way of ensuring that that they are aware at an early stage of the importance an agency attaches to the APS Values, as well as making sure they understand their new APS environment and their responsibilities in all aspects of their work.

Our surveys also reveal some reluctance to report misconduct. This reluctance isn’t new. Neither is it unusual in other workplaces. However, reporting honestly suspected cases of misconduct is vital to the integrity of the APS.

We need to gain a better understanding of why individuals might feel reluctant about the honest reporting of possible misconduct so that the issue can be addressed.

In 2009 for the first time, employees who had reported misconduct were asked whether they were satisfied with the outcome of the investigation. However, just over half – 53% of APS employees – reported being dissatisfied. 

Again the causes of this dissatisfaction are unclear.  It could simply reflect a lack of knowledge of what happened as a result of their report or why.  This could be because many agencies still believe they are constrained by the Privacy Act from advising the employee who lodged the complaint about the outcome.

The Commission issued guidance material jointly with the Privacy Commission about this issue last year (circular 2008/3), explaining what can and can’t be discussed with complainants.  There are possibly more opportunities to communicate about how the system works than are currently invoked by many agencies.

This is an area I think all agencies should revisit when considering their policies and procedures. Are we doing enough to promote a workplace culture that encourages the proper reporting of misconduct, including supporting employees who make reports?

Now please do not misunderstand this point: I am not encouraging vexatious or frivolous claims.  They are a waste of everybody’s time, including the claimant’s.  Rather we need to make sure that we address this reluctance and satisfying ourselves that the system is perceived to be effective can help to underpin public trust in the APS.

To help agencies and employees, the Government has established the Ethics Advisory Service (EAS) within the Commission.  The EAS can help agencies review their practices and procedures and give employees guidance about their personal responsibilities.

4. Cross government collaboration

The final and third strategic action that I identified at the start is the need to improve our capacity and performance in collaboration. 

Public services around the world recognise the need to work more effectively across government agencies and jurisdictions to manage the complex and interconnected problems of public policy in the 21st century. 

So many of these problems are multi-faceted and best approached by employing a range of strategies in concert.  Remedying Indigenous disadvantage and ‘closing the gap’ in outcomes achieved for Indigenous Australians is a very clear example in the Australian context.

At the same time, steps are being taken to coordinate service delivery within and across government boundaries to develop joined up citizen centered services. New technologies are bringing new opportunities to seamlessly coordinate government services around the needs of the citizen – to minimise the inconvenience and other costs experienced by citizens who seek or need help, and to better tailor programs to meet the needs of citizens rather than the reverse.

The imperative for working better in these areas has been recognised by many employees and senior leaders in the APS.  When asked what they thought the ‘APS needs to focus on in the next five years to meet the challenges ahead’, the two areas most commonly selected by SES employees were: 

• leaders who look outward to understand citizen and government needs (49%)
• breaking down silos across the APS to ensure whole-of-government solutions (47%)

The foundation for more collaborative approaches across the APS and with other key sectors and stakeholders is a unified senior leadership group.  The data from our surveys is instructive.

While our senior leaders are undoubtedly committed to their role - survey results indicate that 97% of SES employees are highly motivated, and job satisfaction among the SES is at 92% - there is still a stronger cultural affinity of this group with their individual department rather than the APS as a whole.

It remains a concern that in 2009, less than 40% of SES employees definitely saw themselves as part of a broader APS leadership cadre—similar to the 2007–08 results – and just over half (some 51%) of the SES reported that they align themselves with their agency rather than the broader APS.

APS and Executive Level employees were also asked whether they identify more strongly with their agency or the broader APS.

In 2009, 63% of EL employees identified as primarily employees of their agency, while some 57% of APS employees did so.

These results have been consistent over some years, and are of some concern given the key role of EL employees in designing and delivering government policy, and given they comprise the key group from which future SES leaders are drawn. 

Overall, about 69% of Western Australian employees felt they were employees of their agency and the other 31% considered themselves APS employees.

To understand some of the impediments to working in this way, SES and EL employees who had been involved in cross-agency forums were asked a series of questions on their own agency’s support for working in a joined-up way.

Employees reported similar levels of cross-government collaboration to previous years. However, they had continuing concerns about the structural barriers impeding effective collaboration across agencies.

For example, only 27% per cent of APS senior staff (14% in Western Australia) agreed that current financial and accountability arrangements usually facilitated whole of government work. Another 28% said these arrangements rarely did so (compared to 44% in Western Australia). Things like ICT differentiation and privacy concerns were also identified as contributing factors.

These are issues that the Advisory group on reform of the APS is acutely aware of.  Solutions are likely to require some careful thought about the accountability framework within which the APS operates.

In addition to working collaboratively with our colleagues in other APS agencies, many APS employees also need to work collaboratively with our colleagues in state and territory, and local governments.

During 2008–09, we saw a continued emphasis on using the Council of Australian Governments to address new and emerging challenges.  They spanned responses to the global financial crisis and measures to underpin the implementation of the Closing the Gap Strategy for Indigenous Australians.

The report also shows that the APS continues to work with the community in a variety of ways, including by harnessing new technologies. However, the findings suggest that techniques, such as the increased use of social media tools, are still in their infancy.

Moving to a stronger citizen focus across policy formulation and service delivery has of course been identified as a key priority in the discussion paper issued by the Advisory Group on Reform of Australian Government Administration.  It is an area that will need to be supported by a stronger collaboration culture, starting at the top.  It will provide the government with high quality policy advice and much improved service delivery for our citizens.

Conclusion

The 2009 State of the Service Report shows clearly that we have some very strong foundations on which to build the APS reform process in 2010.  We should be proud of the work we have done and the fact that so many of us are highly motivated and want to make sure ‘we make a difference’ in our role as public servants.

The report’s findings will assist all of us to think about ways to address those key directions I have referred to. 

As is our usual practice, the Commission has provided medium and large APS agencies with their own agency specific reports. We will also be considering what other support we can provide to help agencies respond to the findings in the 2009 State of the Service Report.  I would welcome your feedback and views on how you think we may be able to assist you in this regard. 

Finally, I would like to thank you all for coming today.

Now happy to take questions