Building Better Governance

Part Three—Departmental Case Studies

Department of the Treasury

How a department changed its internal governance committee and organisational structure to better fulfil its role and mission statement by improving communication arrangements, strengthening its strategic focus and improving consultation, reporting and accountability lines.

The department

Treasury provides advice to the Government on improving the wellbeing of the Australian people. It achieves this by providing sound and timely advice to the Government, based on objective and thorough analysis of options, and by assisting Treasury Ministers in the administration of their responsibilities and the implementation of Government decisions.

The department currently has a staff of just under 850, although its portfolio (of 11 agencies including the Australian Taxation Office and the Australian Bureau of Statistics) numbers over 28 000 staff.

The challenge

Until 1998, Treasury had a traditional APS organisational structure. In that year, as part of a major reform process, a new Treasury Management Model was instituted. That model set out: the organisation’s purpose and objectives; an organisational framework; people systems; and support for management development. The model was developed to ensure the department focused as clearly as possible on the needs of Ministers and in a way that maximised the satisfaction that staff derive from working in Treasury.

The new structure comprised Executive Directors (SES Band 3) reporting to the Secretary with general managers (SES Band 2 or SES Band 1) reporting to Executive Directors. Unit managers (SES Band 1 or EL2) reported to general managers. Notably the department removed the former First Assistant Secretary layer of management to improve efficiency and job satisfaction by creating a management structure with clearly defined roles and responsibilities.

These reforms were generally considered to be very positive for the department, and this was confirmed by responses to a staff survey some years later. However, some deficiencies relating to the new structure and roles and responsibilities of senior management emerged over time.

While Executive Board (Secretary, Executive Directors and General Manager Corporate Services Division) considered it important to retain the acknowledged benefits of the 1998 reforms, it also wanted to improve departmental performance by making better use of its more senior people. The aim was to improve the strategic leadership of the Executive Board; enhance the SES leadership capability; and acquire a credible and sustainable ‘surge’ capacity.

The senior executive group also needed to be better at providing management oversight of policy crisis projects while not taking complete responsibility for the large amount of work involved.

The system

New arrangements to address the concerns expressed by the executive and staff came into place in September 2002.

These included designating particularly challenging general manager positions for SES Band 2s; creating more SES Band 1 managers and specialists to ensure that the department’s objectives were met; including SES Band 1 subject specialists in large teams managed by SES Band 2s; and including in each group a senior executive resource working on strategic issues, reporting to the executive director but also working with other group staff and the Executive Board.

In addition, staff titles were clarified to highlight the specific policy advising role of senior staff, while not ruling out a small number of staff at these levels being recognised as subject matter specialists.

Under these arrangements, Executive Directors set up formal and regular mechanisms to give EL2s in their group an opportunity to express first-hand their views on organisational arrangements and management issues.

At the same time, the department moved to a more clearly defined governance committee structure with the intention of focusing Executive Board attention more specifically on strategies and systems, and enhancing the role of SES Band 2 employees.

The Executive Board now holds the following meetings:

weekly management meetings focusing on immediate priorities for the coming week and cross-group coordination
monthly organisation strategy meetings addressing corporate governance and other key issues
monthly policy strategy meetings dealing with major public policy challenges facing the Treasury—attended by SES Band 2 employees and other SES as required
six-monthly policy strategy forums involving all SES, which address major policy and organisational strategic issues.

What was done

In early 2002, Executive Board considered substantial changes to the department’s organisational structure and strategic focus, drawing from its own identification of problems and from results of the 2001 staff attitudinal survey.

Recognising the major scope of the changes, and their likely impact on staff, the Executive Board wanted to get it right. As a result, consultants were engaged to workshop the range of organisational issues identified and possible solutions, consulting widely throughout the department.

During these workshops, executive level staff expressed particular concern about accountability responsibilities which flowed from the changed roles of SES Band 2 staff. Reporting lines were changed to take account of these concerns.

The workshops also revealed continuing concerns regarding communication within the department, resulting in greatly improved staff access to supervisors as well as generally better communication arrangements within the department.

Summaries of issues discussed in Executive Board are now regularly communicated through staff notices and on the intranet, and minutes of meetings are also made available to staff.

Monitoring

During and after the changes instituted in 2002, ongoing staff attitudinal surveys (conducted every second year since that time) and staff consultation ensured that feedback would be incorporated into the implementation of the organisational restructure and improved strategic focus.

A further review was commenced late in the 2006–07 financial year and appropriate implementation and communication will follow.

Benefits

The expansion of Executive Board, and improvements in its meeting structure, ensured a wider perspective and a longer-term, strategic approach to issues. These changes provide clearer guidance to staff on priorities and expectations and an opportunity to include a broader range of SES employees in the strategic management process than had previously been the case.

These changes were important elements in recognising the value and contribution of senior staff to the department’s ability to deliver on its mission statement.

A recent departmental staff survey recorded a more positive response to issues such as leadership, accountability and roles and responsibilities than had been recorded prior to the changes.

Key messages

Making changes to departmental structural and organisation arrangements can greatly increase the ability of senior managers to consider broad, future-oriented, strategic and cross-group issues.
Removal of the divisional structure in a department can lead to greater work efficiency and productivity, encourage the devolution of responsibility, bring about greater clarity of staff roles and responsibilities, and increase the attractiveness of the department to prospective and current staff.
Movement to a strategic management approach and more flexible organisational structure can encourage staff accountability and acceptance of change.

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