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Last updated: 15 February 1998

SES Fellowships compendium

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

Introduction

I am pleased to present the 1997 edition of the Annual Compendium of Senior Executive Fellowship reports. Since their inception in 1984, over 160 Senior Executive Fellowships have been awarded. They have contributed not only to the personal professional development of the Fellows but also to policy development and program delivery in the APS.

A Senior Executive Fellowship offers SES officers the opportunity to broaden their experience and enhance leadership skills and to bring back to their organisations and the APS, information and experience which can improve the way the APS develops and manages the delivery of government policy and services.

Each Fellow is required to provide a detailed report on the area of study undertaken. Many of these reports contain material of Service-wide value but are of a length and complexity which make their publication difficult. For this reason, we publish this compendium, bringing together short summaries of each report and indicating contact points for more detailed information.

The reports included in this issue cover the period from July 1996 to June 1997. They cover a diverse range of issues, including the use of science in government policy, globalisation of broadcasting and online services and best practice in people management and superannuation administration. The fellowships represent a considerable investment by the APS. The quality of the reports indicate that they provide a good return to the service.

I hope that you will find the compendium of value.

 

Dr Peter Shergold
Public Service Commissioner

Glen Barnwell

First Assistant Commissioner
Enforcement Liaison and Regional Coordination Division
Australian Competition and Consumer Commission.

Glen Barnwell is responsible for management of the enforcement of restrictive trade practices and consumer protection law, the Commission's compliance and education program, and the operations of the Commission's Regional Offices throughout Australia. She has worked in the Australian Competition and Consumer Commission and its predecessor organisations three times in her Public Service career. She has also worked in the Department of Finance, the (then) Department of Community Services and Health and the Australian Bureau of Agricultural and Resource Economics as well as in the private sector earlier in her career.

In 1996 the Australian Competition and Consumer Commission implemented an outcomes focused enforcement and compliance strategy aimed at stopping conduct which was in breach of the Trade Practices Act as soon as possible, providing redress for consumers, deterring the repetition of illegal conduct and, where necessary, punishing offenders. Glen visited overseas agencies to learn from their experiences and to exchange ideas about future directions. One of the conclusions of her Fellowship was that Australia is at the forefront of best practice in the enforcement of competition and consumer protection law and this is recognised around the world.

Competition and Consumer Protection Law in a Changing World - International Approaches to Emerging Challenges

The Australian Competition and Consumer Commission enforces competition and consumer protection law which is embodied in the Trade Practices Act. The object of my fellowship was to examine the experiences of countries facing similar regulatory challenges to Australia in these areas. The countries visited during the Fellowship were Malaysia, the United States, France (the OECD), Belgium (the European Commission), the United Kingdom and South Africa

The common aim of the work of all the regulators visited was improving economic efficiency and consumer welfare through the promotion of vigorous competition and fair business practices. The promotion of competition was not an end in itself, but created the conditions for achieving these common aims. The legislation administered by them was accepted as one of the cornerstones of the economic regulatory framework and a consensus emerged on the main issues confronting their organisations in the late 20th century. These were:

The interaction between competition law and trade policy, which is set to be an important area of discussion in international fora for the remainder of the 90s and beyond. The recognition of the interdependencies between the two policies will require lateral thinking and the development of international rules and disciplines. Increased international cooperation between the ACCC and other national competition authorities will be basic to progress in this area.

The development of the global marketplace and its impact on competition and consumer protection law.

The reduction in trade barriers which has occurred in the last several years has been accompanied by an explosion in the rate of technological innovation. These two factors challenge the notion of a traditional 'market' as being purely domestic and of enforcement action as being successful when it achieves outcomes within national borders.

The challenge of maximising efficiencies in deregulating industries.

The introduction of competition to public utilities, which typically have been monopolies, has either been undertaken or is a declared policy of governments in many countries seeking to remove structural impediments to competitive efficiency.

Promoting consumer confidence in the age of cyberspace.

In order to maximise the opportunities created by technological innovation, a high degree of international cooperation will be required between competition and consumer protection authorities at the government level to deal swiftly with illegal activities. So, too, will partnerships with the private sector which plays a critical role in this area through control of the means of payment.

It's clear that the issues facing regulators pose significant management challenges. The downsizing in the public sector which is in vogue with governments around the world and the pressure to do more with less means that the skills necessary for leading and motivating staff in changing times must be developed and maintained. The management course I attended taught that whether in the public or private sectors, the key to achieving outcomes is mobilising staff, in which knowledge of one's own personal style is the key to influencing and leading others.

The management/staff relationship has changed in recent years and employees want to be more involved in decisions that affect them. Managers must gain the commitment of staff in order to implement strategic decisions effectively, particularly in changing times when staff confidence and morale may not be high. In addition to these factors, community expectations of management standards are high and the quality of leadership by the Senior Executive Service in Australia is subject to close scrutiny, particularly in relation to its flexibility, communication and commitment to devolution.

Some of the conclusions drawn in the report and areas of action for the future are:

• Competition law is increasingly being seen as an integral part of the economic policy framework which cannot be divorced from the policies which underpin other commercial strategies, especially trade policy. Close communication and cooperation between regulators and policy developers will assist in the achieve ment of the outcomes of both competition law and trade policy.
• The linkages between competition law and trade policy will require the develop ment of new international rules and disciplines and will require increased international cooperation.
• As a trading nation Australia is an integral part of changes that are sweeping the world with reductions in trade barriers and the challenges and opportunities provided by rapid improvements in technology. In order to participate fully in the global marketplace Australia must remain at the forefront of administration of competition and consumer protection law and be part of the international debate on these issues.

It is in Australia's interests to develop strategic partnerships with countries whose interests are the same in the competition and consumer protection area and to encourage and be part of efforts towards harmonisation of laws or, at least, towards core principles and minimum standards in this area.

In the APEC region, and in the emerging economy of South Africa, Australia has a significant role to play in providing leadership and assistance as these countries continue their economic growth.

It is worthwhile for regulatory agencies to informally benchmark their activities against international best practice. This may point up problems but it is also a boost to staff morale when the results are excellent.

Enforcement agencies face increasing challenges with market globalisation and improvements in technology. Cross jurisdiction cooperation and partnerships with the private sector in the area of self regulation will be necessary to effectively carry out the enforcement function.

Rapid change and the difficulty of foreseeing the future will require flexibility in the administration of competition and consumer protection law.

Contact Information

Copies are also available through the author:

Ms Glen Barnwell
The Australian Competition and Consumer Commission
PO Box 19
BELCONNEN ACT 2616

Telephone: (02) 6264 2896

Brian Douglass

Regional Commissioner, Sydney
Australian Taxation Office

Brian Douglass is a Regional Commissioner for the Withholding and Indirect Taxes Business Line of the Australian Taxation Office (ATO). He is located in the Sydney Office and, among other things, is responsible for the operations of a significant segment of the Business Line along the Eastern Seaboard.

Brian has had considerable experience in the technical and managerial areas of the ATO. Since entering the Senior Executive Service in 1984 he has occupied a number of executive positions at the branch office and corporate levels. From heading the Parramatta Audit Branch he took on a national leadership role in the field of human resources. It was while performing this role that he was awarded his Fellowship. The Fellowship encompassed attendance at two programmes at the Ashridge Management College outside London and interviews with senior representatives of a number of leading companies in Britain and Singapore as well as interviews with the revenue authorities in those countries.

Brian is a qualified accountant and an Associate of the Australian Society of Certified Practising Accountants.

Strategy and Leadership in Changing Organisations

The development of organisational strategy, once perceived as the role of executive leaders, is increasingly being devolved to senior and middle managers. This raises a number of issues including:-

• How does this changing situation impact on the previous leadership role of the organisation's executives?
• What might senior and middle managers need, in order to take on a wider strategic role?

A starting point in addressing these issues is to settle on a meaning for 'strategy'.

For the purposes of this Fellowship paper, strategy means -

• knowing where you are;
• knowing where you want to go;
• knowing how you are going to get there, and
• having the capability to respond to change on the way.

(This definition has been paraphrased from material devised by Ashridge Management College UK. )

As organisations, including those in the public sector, restructure around client or business groupings, delayer and downsize, and adopt a more pragmatic strategic style in response to rapid change, the scope for greater involvement by senior and middle managers in strategy development increases. As a result, certain aspects of the leadership role of the executives of an organisation assume greater importance and accordingly call for increased focus.

These aspects include -

• clearly understanding and effectively communicating the situation and climate in which the organisation seeks to operate;
• testing the responsiveness and dynamism of the strategy evolving at all levels across the organisation;
• promoting the role of custodians of the organisation's governing principles;
• creating organisational growth and new work;
• projecting a positive future for the organisation; and
• playing an increasing part in the selection and development of managers who exhibit, among other attributes, the capacity to:
  • comprehend the 'big picture';
  • appreciate the 'interconnectedness' of the organisation and be able to build complementary relationships;
  • be at home with ambiguity and complexity;
  • project a positive approach; and
  • be analytical, undertake research and be creative.

If strategy development calls for lateral rather than linear thinking, dialogue, commonsense not just specialist knowledge, and an ability to distil the important while looking at the whole, how then can senior and middle managers be equipped to take on this additional function?

The Strategic Management Program developed by the Ashridge Management College uses a number of tools and frameworks for assisting in the development of strategy. The Program provides considerable opportunity to use the tools and frameworks in case studies, simulations and a 'live' case involving one of the College's corporate clients. The main tools include a Political, Economic, Social and Technological (PEST) Analysis, the Five Forces or Competitive Intensity Model, a Key Success Factors Analysis and McKinsey's 7S Model. Collectively, the tools prompt answers to the following questions:-

• What is the macro-economic environment?
• What are the external drivers of change - the likely external impacts on the organisation?
• What business are we in or should we be in? How attractive is it?
• How do we succeed in our chosen business?
• What should be our strategic focus and strategy?
• What is the present nature of our organisation and what will it need to be if we are to succeed?

While the Ashridge Strategic Management Program exposes participants to the strategic frameworks mentioned, and a number of others, the Program also emphasises financial analysis and the role of leaders and managers in devising and implementing strategy. The Program also includes material on culture, learning and change management - major factors in implementing strategies that challenge the status quo.

Devolution of strategy formulation to senior and middle managers brings with it a tension that needs to be recognised and managed. Executive leaders need to take on new work. More will be asked of senior and middle managers, many of whom are already under pressure as a result of delaying and downsizing. The up side, however, is increased organisational effectiveness and efficiency in translating strategic thinking into productive thinking. This will come from managers, and, through them, the staff of the organisation, better understanding the environment surrounding the organisation and the rationale for the organisation's strategic response.

Contact Information

Author contact details :

Brian Douglass
Regional Commission
Australian Taxation Office
PO Box 422
Parramatta NSW 2123

Telephone: (02) 9354 3021

Dominic Downie

Team Leader
Strategic People Management Team
Public Service and Merit Protection Commission (PSMPC)

Dominic Downie's role at the PSMPC is to promote and support the reform of people management in the Australian Public Service.

In 1994/95 Dominic lead the Management Advisory Board project (Achieving Cost Effective Personnel Services) which identified the need for fundamental reform in people management in the APS and set the directions for that reform.

Since then Dominic has worked with groups of APS agencies to promote and support sustainable change, has promoted learning opportunities for Human Resource Professionals and has contributed to the review of the policy framework which applies to people management in the APS.

Prior to his current role Dominic had extensive experience in Human Resource Management and Line Management in a number of organisations in Canberra and at a regional level.

Dominic's Fellowship involved visits to public and private sector organisations in the US, and public sector organisations in the UK, Europe and Asia. Dominic also completed the Executive Human Resource Program at the University of Michigan Business School. Dominic's report highlights how both private and public sector organisations are achieving better performance by integrating their values, culture and the capability of their people.

People Management - Business Customers or Corporate Support

The developing expectation placed on HR in both private and public sectors is to be one of the architects of business strategy, to be experts in change management, to be the people who can support line managers in developing and maintaining the intellectual capital of organisations and to be expert in administration. All elements of this role are strategically important.

Senior HR people in leading organisations are as influential in business strategy as other members of the leadership group. People strategies are part of the business strategy, not an add on. For example, the survival of the Corporate Banking Group of the Bank of America depended in part on staffing rationalisation, but more so on developing employment structures (including financial reward systems) which reinforced corporate rather than personal values and priorities.

Human Resource people are developing and delivering change management tools. The current emphasis is on changes to values, attitudes and behaviour relevant to the future of the organisation. Singapore has implemented PS 21 as a way of promoting creativity and change readiness in the Singapore Public Service so that the country is able to search out and implement changes which will ensure success and growth for Singapore.

HR people are also seen as those who can ensure that the intellectual capital of organisations is maintained and developed. The individual skills and ability of staff are seen as competitive advantage. Growth depends on the ability of the people in the organisation to deliver the goals set. The success of the Investors in People program in the private and public sectors in the UK is one example.

As important is the capacity for HR to be expert administrators; to deliver the low value-added but essential maintenance and advisory functions associated with traditional personnel work in an efficient and customer friendly way. Private sector organisations in particular are pursuing this goal aggressively. HR service centres and call centres are emerging as value for money approaches and as ways of ensuring that HR ceases to be preoccupied by process. While some APS organisations are beginning to address the issue their approach is generally cautious.

Complexity in HR systems is not a preserve of the APS. Many private sector organisations maintain many different versions of conditions of service as the legacy of a history of takeovers and mergers. What does distinguish the APS from even the other public sector systems which I visited is the level of intricacy with which APS conditions are constructed and cross linked. Regardless of the dimensions of complexity of 'personnel' work faced by some private sector organisations, it is clear that they are seeking and achieving two goals; to be administratively efficient, and to make sure that the focus of their HR work is on value-added activities. The APS has only just begun to move in this direction.

It is clear that many organisations, including in public sectors, have learnt to develop employment frameworks and HR strategies that are mission specific. In some of the large banks for example HR policies are a key to ensuring that leaders understand the balance between their individual work and the good of the organisation. At the same time public sector organisations are using that flexibility to develop recruitment, structures, values and reward systems which advance the objectives set by governments.

Finally HR structures are changing to emphasise new value added roles. Service centres are being set up to provide lower level processing advisory functions efficiently. Senior HR staff are increasingly being attached to corporate strategy and business planning functions to ensure integration of people strategies with corporate plans. HR advisers are being placed in the field to advise line managers how they can use the employment framework - recruitment, performance management and advancement and skills development - to maximise business performance.

The design and administration of employment frameworks in the public sectors which I visited are clearly functions of the legal and constitutional framework and culture within which they operate. This highlights the need to look at 'good' practices within the context in which they operate and then try to understand how those practices could add value to the APS. Having said this, my experience on the Fellowship demonstrates that traditional APS approaches to articulating and applying key values are clearly not the only means of doing so. Other public sectors apply a diversity of approaches to meeting their public sector values, which in many cases are similar to ours.

Quantum change is occurring to HR practices within public sector systems. Even those systems which have traditionally been very centralised (eg. Singapore and Malaysia) are making changes in areas such as performance related pay and recruitment and promotion which involve a substantial and sudden departure from established practices.

Contact Information

Copies are available through the author:

Dominic Downie
Team Leader
Strategic People Management Team
Public Service and Merit Protection Commission
Edmund Barton Building
BARTON ACT 2600

Patrick Dennis Gourley

First Assistant Secretary
Defence Personnel Executive
Department of Defence

1969-1983 Various positions, Public Service Board.
1984-1986 Assistant Commissioner, Personnel Policy Branch, Public Service Board.
1986-1987 Assistant Commissioner, Recruitment Branch, Public Service Board.
1988 Assistant Secretary, Training and Development Branch, Department of Defence.
1989 Assistant Secretary, Industrial Relations Branch, Department of Defence.
1989-1993 Principal Adviser, Government Authorities and Defence Division, Department of Industrial Relations.
1993 Principal Adviser, Corporate Development Division, Department of Industrial Relations.
1993 First Assistant Secretary, Human Resources and Management Division, Department of Defence.
1997 First Assistant Secretary, Defence Personnel Executive

The Devolution of Personnel Management Responsibilities - Experience in Three European Countries and Issues in Australia.

This report outlines the experience of Sweden, the Netherlands and Denmark in the devolution of central personnel management responsibilities in their central civil services.

The report summarises experience to date in the Australian Public Service and considers particularly issues relevant to the devolution of pay and conditions fixing responsibilities to agencies in the Service.

Denmark, Sweden and the Netherlands have all attempted to provide agencies in their civil services with greater personnel management flexibility. Denmark and the Netherlands continue, however, to maintain fairly close control over pay, classification and conditions. Sweden has much more devolved arrangements, although the extent of the central role in pay and conditions is more significant in a number of respects than that now being adopted in the Australian Public Service.

The report outlines a number of difficulties with the use of a productivity bargaining based approach to remuneration determination, especially in public sector organisations.

It raises questions about the economic rationality and incentive value of productivity bargaining and points to the need for it to be tempered by other considerations, including rates of remuneration paid by other employers and at least the partial supplementation of costs remuneration improvements.

The report suggest that if productivity cannot be sustained as a basis for remuneration policy then the devolution of pay and conditions fixing responsibilities may add to pressures to bid up remuneration in the Public Service.

While the devolution of responsibility to determine personnel management structures will give agencies greater flexibility to make arrangements more tailored to their circumstances, the report suggests that it will also significantly add to the costs of personnel management, erode the practical working of the career service and make it more problematic that staff in the Service will be distributed in accordance with overall government priorities.

Contact Information

Copies of the full report are available through the author:

Mr Patrick Gourley
First Assistant Secretary
Defence Personnel Executive
Department of Defence
NCC-B7-08
14 Moore Street
CANBERRA ACT 2601

Telephone : 02 6266 8622

Pat Manser

Director, Policy Communications
Australian Broadcasting Authority

In her seven years in the agency, Pat Manser has managed the Programs Branch, initiating new directions in research. She then spent two years managing the Licensing Branch, implementing new legislation in ownership and control, licence allocation, industry analysis and narrowcasting areas.

In her current role, Pat's preoccupations are with overall policy for the new developments in broadcasting, including programming and ownership issues, and the public and international relations of the Authority.

Pat's background includes stints as an editor of the Macquarie Dictionary of Australian English, policy responsibility for adult education, and teaching. Her academic qualifications are in Arts, Social Sciences and Industrial Law.

Globalisation of Broadcasting and Online Services

The terms 'convergence' and 'information superhighway' in relation to the broadcasting and online services industries are becoming so overused as to be almost meaningless. They are, nonetheless, the tips of the icebergs of some serious issues for Australia, its government, regulators and the community generally. These issues range from the protection of children from material that might be harmful to them, to national sovereignty and the globalisation of the industries involved. They span questions of economic growth in the 'information age' to the social values and mores of the societies involved.

The report consists essentially of a discussion of the current state of play on these matters in overseas countries, specifically the United Kingdom, France and Singapore. These countries were chosen because of their international input into the issues and their similarity with Australia in their attempts to ensure good public policy outcomes in both broadcasting and online services.

All three have distanced their broadcasting and online regulation from direct government involvement to the extent that they all have independent statutory authorities, accountable to their parliaments, to manage these issues. All three are multicultural communities with interests in social cohesion and a focused role for government intervention in industry with specific social goals in mind. All three regulate the content of the broadcasting and online industries to some extent.

The pressures to change this latter approach are canvassed:

• the nature of the industries involved and their desire for economies of scale;
• conflict of this with consumer demand for localised product;
• differences in the approach and style of government intervention and regulation, especially from the USA;
• the role of organisations such as the OECD in sponsoring debate about the problem of economic growth but no jobs;
• the possibility that the new media will provide both.

The report indicates that there is new confidence internationally in asserting the importance of the social goals of cohesion and the maintenance of cultural diversity. The European Union has paid particular attention to this in its work on broadcasting issues. While diversity is encouraged, the sovereignty and cultural differences of the member countries is respected and fostered. The position of the Asian and Pacific regions in these debates is discussed.

Online services and the methods being proposed internationally to manage serious content issues are outlined. These point to a different perspective on the part of regulatory agencies around the world: greater significance will attach to the choices that can be made by the end user rather then the originator of the material. The technology to do this already exists and is being used and explored in international forums such as UNESCO and the OECD. The role for regulators in this process will increasingly be facilitative in nature, with 'safety net' styles of underpinning for content issues.

The kinds of devices countries will use to manage these complex issues will include:

• maintenance of the view that these industries have special obligations to their communities;
• maintenance of the importance of the blend of our ideas and those of others, to keep ourselves informed in a sophisticated way;
• the use of international forums to explore consensus and difference in these value-laden areas;
• working with businesses to achieve good social policy outcomes that also represent good business.

Contact Information

The full report of this Fellowship is available on the Internet PSMPC Homepage at http://www.apsc.gov.au

Copies are also available through the author :

Ms Pat Manser
Australian Broadcasting Authority
GPO Box Q500
Queen Victoria Building
SYDNEY NSW 2000

Telephone: (02) 9334 7833

Peter Skinner

Deputy Commissioner
ComSuper

ComSuper administers superannuation for public servants and the military. The organisation has undergone substantial change in recent times to meet the enhanced accountability requirements expected of all public sector organisations.

Whilst ComSuper currently enjoys a legislative monopoly, it must be able to demonstrate best in class performance to maximise the opportunity for its continuity. The purpose of the SES Fellowship was to study international best practice for superannuation administrators.

Peter is a graduate of the University of Tasmania and the University of New South Wales. He joined the Public Service in 1969 and worked in Hobart, Sydney and Canberra. From 1980 to 1982 he was on exchange with the UK Ministry of Defence. Between 1984 and 1992, he held various SES positions in Defence, mainly in the fields of finance, personnel and superannuation. He was appointed Deputy Commissioner of ComSuper in August 1992.

In 1995, he was elected to the NSW governing body of the Association of Superannuation Funds of Australia.

Determinants Of Best Practice In Superannuation Administration

The objective of the SES Fellowship was to identify best practice for the administration of pensions and to determine what gives rise to best practice.

Best practice pension administrators share a number of characteristics including low costs, high service levels, unambiguous relationships with major shareholders and comprehensive governance processes

Identification of best practice was not a scientific study as the diversity between the pension administrators made direct comparisons difficult. Not only were the regulatory environments and schemes rules different but so too were the interrelationships between the contributors, the employer, and the pension administrator. For example, for some pension plans, the employer collected contributions whilst for others, the pension administrator collected contributions. For other schemes, no contributions were collected. In addition, some pension administrators administered retrenchment, disability and death benefits whilst others only paid pensions.

To compound the problem of comparability, there was great diversity in the level of service offered to contributors and pensioners. Some would pay benefits overnight whilst others would take as long as two months.

Best practice will remain a loosely defined concept as it generally involves a trade off between costs and service levels. Traditional thinking is that a high service level as measured by response times (for benefit payments, answering queries etc) requires a high cost structure. Today, that is generally the case. However, with improvements in technology, organisational architecture and administrative processes, low costs should be possible with high service levels. This is because, for example, the capacity to answer telephone calls immediately and to have a short duration for payment of benefits are both low cost strategies. To achieve high service levels though requires a considerable capital investment in technology and human resources. As computer systems become outmoded, the replacement technology means that the trend towards lower costs and higher service levels is inevitable.

Another issue for best practice is quality. High quality should mean lower costs as rework is avoided. However, in some cases, rework is minimal if the client is unaware of the lower quality. Examples include complexity in communication material and incorrectly calculated benefit quotations which generally escape comment by contributors.

Given the above, identification of best practice was a difficult issue as it involved the trade off between regulatory environments, pension plans, relationships between the employer, contributor and pension administrator, costs, service levels and quality. However, qualitative comparisons were possible and in some countries I was able to utilise the results of formal benchmarking networks.

Many organisations exhibited one or more facets of best practice. Few organisations exhibited a complete or near complete array of best practice features.

Whilst the interpretation of what constitutes best practice is far from straight forward, the real challenge is to determine what gave rise to best practice.

Organisation architectural issues is the key to best practice. The report deals firstly with these issues followed by some observations on more mechanistic issues including information technology and record keeping.

Much has been written on what constitutes an effective organisation. Having had the opportunity to examine arguably the foremost pension organisations in the world, the bridge between effective organisational architecture and best practice is very apparent. Best practice cannot be achieved without the basic building blocks of an organisation. These building blocks are:

• mission statement,
• effective trustees,
• an accountable CEO, and
• effective organisational architecture:
  1. assignment of responsibilities, key performance indicators and critical success factors,
  2. information systems supporting the above and consistent with assigned responsibilities, and
  3. evaluation and reward systems which provide incentives to make value adding decisions¹.

The mission statement is the indicator of best practice. In short, any mission statement should be able to address the following questions:

1. does it state the purpose of the organisation?
2. does it set out challenging (but achievable) goals for the organisation (in order of importance)?
3. does it identify the broad strategies to realise the goals (in order of importance)?
4. is it specific enough to guide resource allocations?
5. will it evoke enthusiasm and commitment within the organisation? ²

Effective trustees and an accountable CEO are self explanatory. Effective organisational architecture is another prerequisite for best practice. Many organisations had some elements in place but relatively few had all d(i), d(ii), and d(iii) mentioned above. It is essential to have all three elements.

To quote from the Ambachtsheer Letter No 115,

'excellently managed pension funds assign decision rights in ways which effectively link decision making authority with the relevant information needed to make good decisions'.

A necessary condition for best practice is the organisational building blocks. With the architecture in place, the pension administrator can utilise technology and administrative processes to gain best practice status. The remainder of the report examines best practice processes and mechanisms for pension administrators.

Chapters 2 and 3 address organisational architecture. The assignment of responsibilities is achieved through performance level agreements (PLA). Measurement against the PLA through an information system is essential for accountability and it gives transparency to the operational efficiency and effectiveness of the administrator. I concluded that best practice characteristics for accountability arrangements include:

• a system where outputs and productivity indicators are systematically measured,
• a PLA where deliverables and expectations by all stakeholders are documented,
• a PLA which incorporates service levels, survey feedback, input costs, output costs, standard unit of work measurements and productivity measures,
• an activity based costing system which attributes costs to stakeholders, to subsets of scheme members (ie contributors, preservers, and pensioners) and, within each member subset, to major activities (eg communication costs per pensioner). Costs should also be presented to show the costs of major activities across the entire pension plan (eg the total cost of communication for all subsets of members),
• quality standards which are specified and measured, and
• promulgation of the outcomes of accountability arrangements to all stakeholders and throughout the organisation.

Chapter 3 addresses business plans for trustees. This remains a novel concept for trustees although it is relatively common in other businesses. Best practice business plans should have the following attributes:

• (I) delineation between policy, operations and control,
  (ii) delineation between asset functions, combined asset and liability functions and liability functions,
• comprehensive coverage of all aspects of trustees duties,
• assignment of responsibilities for each segment of the business plan,
• key performance indicators included where appropriate,
• the business plan should be a journey - from status quo to the envisioned future.
• The process of review and establishing the new plan for the next financial period provides a mechanism for a systematic, comprehensive and integrated way forward, and
• the business plan should be summarised and communicated to stakeholders in the annual report and also used as a basis for formulating performance level agreements with service providers and stakeholders.

Chapter 4 is an operational guide to benchmarking for pension administrators. Benchmarking is an essential element of best practice and should embrace the following:

• objectives for benchmarking,
• disaggregation unit costs and activity levels to at least show outcomes for contributors, preserved members and pensioners,
• inclusion of service level and quality indicators in any benchmark exchange, and
• . a sharing of the outcomes of benchmarking with trustees and staff of the pension administrator. The latter is particularly important as it can establish a sense of competition.

Chapter 5 discusses information technology which is a crucial determinant of the efficiency and effectiveness of the administrator. Best practice characteristics include:

• periodic testing of cost effectiveness of internally provided IT services,
• periodic assessments by IT users and management on the quality of service,
• a service level agreement between the IT area and the users specifying consultative mechanisms and deliverables,
• a cost effective disaster recovery plan which is regularly reviewed and tested, and
• a continuous improvement program.

Chapter 6 addresses client service in terms of employers, contributors, pensioners and preserved members and documents some elements of best practice for client service for each of those groups.

Chapter 7 discusses records management because a reliable, responsive and cost effective records management system is an essential ingredient for best practice.

The final chapter addresses the impact of competition on the pensions administrator. It examines the drivers of the transformation process and the relative merits of introducing different forms of competition to the administrator.

Finally, in my discussions with CEO's of pension administrators, there were many organisational and operational characteristics nominated as being most critical in the journey towards best practice. The seven organisational and operational characteristics most often mentioned are listed below:

• stress results, not activities,
• focus on customer service,
• encourage innovation through risk taking,
• provide continuous improvement,
• work based teams,
• reward performance, and
• build a sense of competition by gathering and publishing information on the market place identifying the competitors.

Although the above characteristics lack a specific underpinning, it is noteworthy that practically all aspects feature in my report on international best practice.

To complete the picture of the best practice pension organisation, it remains for me to comment on some behavioural issues. Firstly, there is an international trend to assessing the results of work based teams. They are still within an experimental stage and are expected to be the new wave in terms of productivity improvements. Secondly, reward systems are starting to infiltrate pension administration. I observed one best practice organisation which had an enterprise pay agreement tied to improved service levels and lower costs.

Conclusion

The purpose of the SES Fellowship was to study international best practice for pension administration. I concluded that:

• administration of pensions is changing rapidly, commensurate with available technology;
• technology, per se, does not lead to best practice; and
• organisational architecture must be comprehensively developed and be well bedded down.

Identification of best practice is a judgemental issue involving a track record of continuous improvement and an assessment of the administrator delivering high levels of services with relatively low costs and with high quality. How this occurs is no mystery and is deceptively straightforward. It is fundamentally due to effective management based on mission statements, informed trustees, accountable CEO's assignment of responsibilities, supporting information systems and an evaluation and reward system.

Contact Information

The full report of this Fellowship is available on the Internet PSMPC Homepage at http://www.apsc.gov.au

Author Contact Details

Peter Skinner
Deputy Commissioner
ComSuper
PO Box 22
Belconnen ACT 2617

Telephone: 02 6252 6839

¹ Adapted from The Economics of Organisational Architecture, Journal of Applied Corporate Finance, Summer 1995.

² The Ambachtsheer Letter 124, April 15 1996.

Ernst Willheim

Special Counsel
Office of General Counsel
Attorney-General's Department

Ernst Willheim joined the Attorney-General's Department in 1967. He has been an SES Officer since 1973 and at the Division Head level since 1983. Ernst has headed several central office divisions including the Advisings Division, the Administrative Law Division, the Community Affairs Division, the General Counsel Division and the Justice Division. Since 1991 he has been Special Counsel, practising as an advocate and legal adviser. Ernst appears as counsel for the Commonwealth in the superior courts including the High Court and the Federal Court, also the Family Court and, before its jurisdiction was transferred, the Industrial Court. He has also appeared in the Courts of Appeal of New South Wales and Queensland. Ernst specialises in public law matters, particularly constitutional law, administrative law, statutory interpretation and Aboriginal law matters. Major Aboriginal law matters in which Ernst has appeared as counsel include the Hindmarsh Bridge and Broome Crocodile Farm appeals (challenges to declarations under Aboriginal heritage protection legislation), Northern Territory v Lane (the first challenge to a decision of a Registrar of the National Native Title Tribunal), Gibbs v Capewell (concerning the meaning of 'Aboriginal') and Pareroultja v Tickner concerning the relationship between the Aboriginal Land Rights (Northern Territory) Act and the Racial Discrimination Act. He has published widely in legal professional journals.

Constitutional Recognition and Self-Determination of Indigenous Peoples: International Comparisons

The purpose of the Fellowship was to examine constitutional recognition of, and self-determination arrangements for, indigenous people in three advanced Western countries - the United States, Canada and Japan.

Indigenous peoples in all three countries share a common history of oppression. They have been substantially displaced from their traditional lands by external colonisers. Traditional language and culture have to a substantial extent been destroyed. For decades the dominant cultures pursued policies of forced assimilation - children were required to attend schools controlled by the dominant culture, traditional language and traditional cultural practices were discouraged. Living standards and indeed all the conventional socio-economic indicators (income, health, education, employment, etc) place the indigenous minority well below the mainstream.

In all three countries recent years have seen a major resurgence of pride in indigenous identity. Elders speak of times in their youth when they were ashamed of their indigenous background. Now this background is a source of pride.

Major efforts are now under way to preserve indigenous culture, language and identity. Political interest in recognition and self-determination is an important aspect of the resurgence of indigenous awareness. Articulate and powerful indigenous leaders are emerging. International developments, particularly the work of the United Nations Working Group on Indigenous Populations, have had a major influence in stimulating indigenous awareness and building indigenous networks.

The indigenous people in North America, the Native Americans as they prefer to be called in the United States, and the First Nations in Canada, enjoy a high level of legal recognition and self-government.

In the United States, recognition of indigenous people as sovereign nations has been achieved through the judicial process.

Their status, as sovereign, domestic dependant Nations, is in many respects unique. They have the legal capacity to make and enforce laws over their members and their territory but no external sovereignty. On the other hand they have many other attributes of sovereignty, for example, immunity from State laws, including State taxes. Many have full scale tripartite governments modelled on the federal government, with an executive branch, headed by a President, a legislative branch of elected members and a judicial branch which may comprise a Supreme Court and District Courts.

In Canada, recognition has been achieved through constitutional reform, political recognition of the inherent right to self-government and, importantly, through modern treaty negotiations.

One of the outcomes of the process of patriation of the Canadian Constitution was the recognition, in section 35 of the Constitution, of Aboriginal treaty rights. The effect is constitutionally to entrench both existing and new treaty rights.

More recently, the impetus for constitutional change in Canada has waned. The interest is now in putting practical content into the so called 'inherent right of self-government', a right recognised by governments in Canada, both provincial and federal.

Canada is now embarking on an extraordinarily complex round of treaty negotiations with First Nations. These negotiations are being conducted with quite small units, individual Bands, sometimes a few hundred or a few thousand people. The objective is said to be to achieve practical results on the ground. These negotiations can take many years. Treaty arrangements are complex, covering not only areas of jurisdiction to be exercised by First Nation governments but also resolution of outstanding land and compensation claims. Individual treaties run into hundreds of pages. It is a resource intensive process, for both First Nations and governments.

Concurrently with but separately from self-government negotiations, program administration is being progressively devolved from central government departments to Indian Bands.

In both the United States and Canada, there is widespread agreement that devolution of program administration to self-governing indigenous communities has enhanced program administration and accountability.

The position of the Ainu, the indigenous people of the northern regions of Japan, particularly Hokkaido, is less well known. Yet there are many similarities. They are a small indigenous minority in an advanced developed country. They see themselves as the original inhabitants of their lands, lands which were subsequently occupied by an alien people, leading to dispossession and depression. Unlike Australian and North American indigenous people, however, the Ainu have achieved less recognition as a separate indigenous people and less control over their own affairs. Their aspirations are more limited. The main objectives appear to be cultural preservation and education and provision of adequate funding for these purposes. The Ainu do not administer large scale government programs and appear not to have any aspirations in the direction of self-determination.

Contact for information:

Copies are also available through the Author:

Mr Ernst Willheim
Special Counsel
Office of General Counsel
Attorney-General's Department
Robert Garran Office
BARTON ACT 2600

Telephone: 02 6250 6808

Dr Paul Williamson

Director
Bureau of Resource Sciences

Dr Paul Williamson worked internationally in petroleum exploration and development with a US multinational petroleum company for the first third of his professional career.

During the second third he researched Australian petroleum prospectivity with the Bureau of Mineral Resources in the Australian Department of Primary Industry and Energy. Currently he is a Branch Head in the Bureau of Resource Sciences in the same department. The Bureau of Resource Sciences is a multidisciplinary research agency that provides scientific advice to policy in areas including agriculture, fisheries, forestry, quarantine, animal health, minerals and petroleum.

Making Best Use Of Science In Government Policy

This report is the result of a study carried out in June and July 1997 as part of the Senior Executive Fellowship Program.

The study looked at the uses of scientific advice and research in formulating and implementing policy in the United States, United Kingdom, Japan and in Greenpeace. The aims were to draw together insights on best practice to help optimise use of scientific inputs in diverse circumstances in the Australian Public Service. This recognises that the emphases which a particular area of government would apply to the insights and information from this study would vary to reflect their circumstances. A third aim was to investigate ways to lower work loads and costs at a time of diminishing resources in the Australian Public Service.

The study was undertaken through interview in government agencies and with Greenpeace. It showed that scientific advice to government policy makers was generally assumed to be a critical input and was mainly provided from within government. Scientific research and advice to policy was also contracted from outside government. In the UK this was often from privatised previously governmental agencies. Other providers included academia, expert individuals and research institutes.

Scientific advice required appropriate expertise and to reflect an understanding of the needs of the policy process. Advice needed to be objective. Scientific advice and research in policy included specialised inputs, explaining the meaning and significance of scientific data and information and ensuring their quality. Scientific advice could help to ensure scientific credibility, provide specialised inputs, promote the acceptance of policy, and reduce short and long term costs. It also promoted better practice in the industry or activity for which the advice was given. A summary of other results of the study is as follows:

There was a generally recognised need for expert and balanced scientific advice which was particularly critical for some publicly sensitive issues. External inputs were accessed through committees, peer review, academia , industry, community groups and other government agencies. Inputs were also increasingly international. Chief Scientists Units were used in the UK 'intelligent customer model' to help define needed inputs and providers.

The challenge in obtaining objective advice was that the tone of advice could be affected by who was paying and by the background and affiliations of advisers. The need to avoid possible or perceived conflict of interest made it difficult to use consultants, who mainly consulted for industry on matters on which scientific advice was being sought by government. A good example of aiming for objectivity through a breadth of inputs, including scientific inputs, was in the US Advisory Committee process which is considered by those who use it as 'self correcting'. Where the channel to the Minister or client for ultimate advice was direct, a systemic tendency towards territorial behaviour and less or token consultation appeared to be possible.

To make advice useful, clear definition by those seeking and providing advice of the questions to be answered and the scope and depth of the required responses was considered essential. This required good communicating between the policy- makers, scientific advisors and industry. Given the challenge of communication between these cultures and with stakeholders it was considered usually better to err on the side of what was considered 'too much communication'.

The Australian tradition of the non-specialist public service presents a challenge in optimising the quality of advice because it can result in an emphasis on process at the expense of content. The interactions of the UK Government with the European Community (EC) appear to have acted as a peer review process and to have resulted in a concerted move to put scientists into the highest levels of policy development and implementation. The incentive for high quality content in Australia is likely to come from the need for efficient and effective policy development and implementation.

Timeliness of policy advice is a major challenge in government. Timeliness of scientific advice was facilitated by clearly defining and agreeing requirements so that misdirected or excess efforts were avoided. Workshops were a useful device for quickly drawing together data and information. Project management approaches including agreed deadlines were used. Timeliness in policy was also improved by scientific advisers keeping a watch for emerging issues and informing policy areas of them. A challenge to timeliness was the expectation that government would deliver sound advice and policy. The latter could be difficult to do quickly.

Costs were also reduced by clearly defining and agreeing requirements for scientific advice and following up to ensure efficient delivery. When outsourcing was used it was considered necessary that government retained capability in-house so as to be able to act as an 'intelligent customer' as in the UK.

Acceptance of the scientific aspects of policy was improved by consultation to develop negotiated and broadly accepted outcomes. Involving clients and stakeholders in the policy and advice processes through consultation, inputs and reviews promoted broad ownership of the policy. Similarly, scientific peer review promoted broad ownership by the scientific community. In seeking acceptance of policy, usually it was considered better to err on the side of openness. Openness in policy development was being addressed in US and Japan. Public acceptance was enhanced by communicating with the public in a way they understood. Greenpeace was an example of doing this well. Perception of capture by vested interests of governmental policy or advice processes damaged public acceptance of policy. A benefit of broad acceptance of policy was that it tended to reduce the level of expensive legal court challenges.

Contact for information:

The full report of this Fellowship is available on the Internet PSMPC Homepage at: http://www.apsc.gov.au

Copies are also available through the Author:

Dr Paul Williamson
Petroleum Resources Branch
Bureau of Resource Sciences
PO Box E11
KINGSTON ACT 2604

Phone: (02) 6272 3183
Mobile: 0418 672 634
Fax: (02) 6272 4696
Email: pyw@mailpc.brs.gov.au
Internet: www.brs.gov.au

Author's home contact:

Phone: (02) 6281 5401
Mobile: 0418 672 634

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