Chapter 9: Building APS capability

Managing people for business outcomes

Managing people for business outcomes involves line managers planning for, and actively managing, staff to achieve agency and program outcomes. It also involves the human resource function in the agency supporting people management practices to achieve agency outcomes. Workforce planning is central to this issue.

In June 2003, the ANAO tabled its report Managing People for Business Outcomes, Year Two.⁵ The report assessed agency performance in people management against nine practice areas set out in Figure 9.2. In making these assessments, the ANAO stressed that agencies should identify those practice areas that are most critical to business, and develop appropriate performance targets and measures. It acknowledged that it ‘is not feasible for agencies to try to demonstrate all better practice principles in all practice areas’.⁶ But it also promoted strongly an integrated approach focused on improving business outcomes.

The report found that progress had been made in the majority of participating agencies in year two of the study, with three agencies making significant improvements in people management. However, it found that the integration of business and people planning activities remained a high-priority area for improvement. In particular, line managers were experiencing challenges in recruiting and in developing the required workforce capability.

Agency people management issues

The agency survey asked agencies to identify their three highest-priority people management issues in 2002–03 from the nine practice areas identified in the ANAO’s reports and an additional issue, flexible working arrangements. Results from the agency survey are at Figure 9.2.

There was considerable variation among agency responses, suggesting that agencies were able to identify practice areas more critical to their own business needs. However, consistent with the findings of the ANAO report on managing people for business outcomes, the most common areas identified as a priority were performance management, learning and development, and recruitment and selection. The three lowest-rating agency priorities were reward and recognition, flexible working arrangements, and workplace diversity.

There were substantial differences in the priorities identified by small, medium and large agencies. In particular, large agencies were more likely than other agencies to identify workforce planning (50%) and learning and development (59%) as priorities. Small agencies put greater emphasis than other agencies on recruitment and selection (54%), employee relations (46%), and organisational change (49%), and less emphasis on performance management (46% compared with 58% for medium agencies and 55% for large agencies). These differences suggest that small agencies may be more concerned with immediate people management issues than medium or long-term needs, or that they have a greater emphasis on meeting skill and capability needs through recruitment, as well as by developing existing employees. It was also mentioned by several small agencies that they faced challenges when developing and delivering HR initiatives.

Being such a small agency we don’t have access to the same level of resources as a larger agency and therefore we need to think creatively about the best way to deliver HRM support.

The employee survey also asked ELs and SES employees to identify their highest-priority people management issues from the same list. Results from the employee survey are at Figure 9.3. While this figure gives an indication of EL and SES priorities across the APS, it is not directly comparable to the agency results, as agency survey results are not weighted by size of agency.

Like agencies, ELs and SES employees rated the areas of performance management, learning and development, and recruitment and selection as high priorities, but put greatest emphasis on workforce planning. Workplace diversity was a low priority for employees but a substantial minority of employees viewed flexible working arrangements and rewards and recognition as priorities.

Agencies were also asked to anticipate their people management priorities for 2003–04. The practice area most likely to be rated as a priority for 2003–04 was workforce planning (chosen by 67% of agencies, up from 38% in 2002–03). There was also an increase in the number of agencies nominating learning and development as a priority (61%, up from 46% in 2002–03). These results suggest that an increasing number of agencies are recognising the need to address this issue and generally move towards a more strategic approach to people management.

HR capability in agencies

Both the agency and employee surveys explored attitudes to critical HR challenges. For agencies there was substantial agreement (82%) that their HR function has a high level of capability in developing, implementing and evaluating policies and strategies. This result was strongest in medium and large agencies (85% and 96% respectively, compared with 73% for small agencies).

ELs and SES employees were also asked about their attitude to HR capability issues. Their perceptions were generally less favourable than agency results. While almost half of employees (49%) agreed that their agency’s HR area had the ability to assist them to address critical people management issues, 22% disagreed and 25% neither agreed nor disagreed, with another 5% not sure. Employees were more likely to agree if they were located outside the ACT (56% compared with 44% of employees in the ACT). SES employees were generally more positive about these issues than ELs.

While agency and employee survey results varied on this subject, it is worth noting that Managing People for Business Outcomes, Year Two identified opportunities for human resource functions to improve their level of support to line managers, including by drawing on the guidance set out in the APS Commission’s HR capability model, which articulates the capabilities required of effective HR staff in the APS.⁷ To assist HR practitioners to develop further their capabilities against this model, the APS Commission has designed and implemented an HR Capability Development Program.

In relation to the HR capability of line management, 47% of all employees rated their immediate supervisor as highly effective at managing people, but 35% rated them as only moderately effective and 17% rated their effectiveness as low. Supervisors were rated as more effective by younger employees and by women, and were rated as less effective by people with a disability. SES employees were most likely to rate the effectiveness of their supervisors as high, followed by APS 1–6 employees. However, APS 1–6 employees’ views were more polarised than other employees, with employees in this group most likely to rate the effectiveness of their supervisors as low.

EL and SES employees were also asked for their views on specific HR issues. Fifty-three per cent of EL and SES employees agreed that the senior management in their agency supported the development, implementation and evaluation of HR policies and strategies, with only 14% disagreeing. However, employees (42%) were less likely than agencies (56%) to agree that they had the necessary data, and employees (37%) were also less likely than agencies (56%) to agree that their agency culture was receptive to change. Forty-one per cent of EL and SES employees agreed that line managers in their agencies were receptive to changes in people management policies and strategies. SES employees were generally more positive than EL employees. These results suggest that line areas in some agencies may be facing particular difficulties that HR areas need to be aware of and better support.

Workforce planning and succession management

The MAC report on organisational renewal found that the changing APS environment creates both the imperative and the flexibility for APS agencies to structure their workforce strategies to meet business capability and renewal requirements.⁸ It found that agencies needed to engage in more systematic workforce planning, including:

• understanding their own workforce demographics and characteristics
• identifying their particular current and future capability requirements and implementing an integrated human resource management strategy to make sure they are met
• implementing effective succession management.

The report stressed that the changing profile of the APS, including its age profile, posed challenges for the management of the APS and individual agencies. In particular, it revealed that, based on current trends, around 23% of the APS is likely to depart in the next five years. SES and EL employees will make up higher proportions of this group because of their older age profile (27.4% of SES and 18.1% of EL employees were aged 50–54 years at June 2003). There is also a wide variation in the age profile of individual agencies, so that some face much higher potential retirement rates than the average.

Workforce planning issues for the APS were also raised by the Senate Finance and Public Administration References Committee in its report Recruitment and Training in the Australian Public Service, tabled in September 2003. ⁹ The report found that recruitment in the APS faced challenges, including demographic challenges and challenges related to a more devolved environment. It identified particular issues relating to the recruitment of young people, graduates and Indigenous Australians. In addition to specific recommendations aimed at increasing recruitment and retention of these groups, it made recommendations in relation to more strategic approaches to recruitment practices, workforce planning, and the role of the APS Commission. The Government is preparing its response to the report.

The passing through of the large cohort recruited in the late 1960s and early 1970s presents a significant challenge that will not be met simply by looking at current replacement candidates: consideration needs to be given to retaining valued employees and to positioning people with potential to take on leadership roles in the future through structured development processes over a number of years. Action is also needed to build up the quality of recruits, to develop them, and to retain them, or ensure they are favourably inclined to return should they leave to broaden their experience.

Data from APSED presented in Chapter 2 highlight some concerns in relation to the extent to which agencies are systematically dealing with demographic issues. In particular, the fluctuations in intakes of graduates and other trainees, and the continuing falls in recruitment in APS 1–2 employees suggest that career pathways for young people may have been limited in recent years.

Agencies also need to encourage older workers who are making a valuable contribution to stay longer in the workforce, including by developing more flexible employment options such as flexible working hours and patterns, project work and mentoring. The financial incentive available to some members of the CSS to resign before they turn 55 (the 54/11 issue) is a matter that may need to be actively managed by some individual agencies; but agencies in general need to address the potential early departure of valued staff, particularly in the context of broader labour market issues into the future.

The agency survey asked whether agencies had put in place policies, strategies and/or frameworks that would ensure they have the skills and capabilities needed for the next one to five years. Only 36% replied that they had such policies. However, consistent with the increased priority that agencies are placing on workforce planning for 2003–04, another 54% of agencies indicated that they were developing them. Policies were more common in large agencies (41%) than in small or medium agencies (34% and 35% respectively). Where such policies existed, most were relatively current. For those agencies that had or were developing policies, strategies or frameworks, 68% had introduced or updated them within the last two years. Large and medium agencies (82% and 72%) were more likely to report having updated policies within the last two years than small agencies (55%).

Only 4% of agencies had a formal succession plan in place, with such plans being more common in large agencies (9%). However, the survey results suggest that many agencies are planning for succession in a more informal way. Over 74% of agencies indicated that their agency identified potential leaders through manager/CEO identification at all classification levels, with the manager/CEO role strongest at the EL levels, the feeder group to the SES (used by 83% of agencies). While self-identification was the most commonly reported response at all levels (between 83% and 97%), over half of all agencies reported using performance management systems to identify potential leaders (51%–57%). Assessment centres were most commonly reported at the EL levels (22%) and were much more common in large agencies (used by 64% of large agencies at the EL levels).

Overall, the results suggest there is increasing recognition among agencies of the need to plan for future skill and capability needs and for succession management. However, there is potential for agencies to take a more formal and systematic approach to the issue. In particular, while there may be limitations to the appropriateness of formal approaches for smaller agencies, there appears to be strong potential for small and, to a lesser extent, medium agencies to put greater emphasis on forward planning.

To assist agencies in workforce planning, the APS Commission is currently developing an internet interface that will allow agencies direct access to their data from APSED. HR managers will be able to extract customised tables providing a demographic profile of staff in their agency, as well as APS averages for benchmarking. Data items include age, length of service, employment status, gender, EEO group and location but do not yet include qualifications. The data can be shown in both tables and charts that can be downloaded into reports. Agency-specific data will be confidential to the particular agency.

 

5 ANAO Report No. 50, 2002–03. The findings of this report are based on an audit of 13 agencies. It builds on an audit of 14 agencies in 2001–02 ANAO Report No. 61, 2001–02, Managing People for Business Outcomes.

6 ibid., p. 17.

7 ibid., pp.16-17.

8 MAC Report 3, Organisational Renewal, 2003. This report specifically addressed the challenge of building ongoing capability within the APS workforce.

9 Senate Finance and Public Administration References Committee, Recruitment and Training in the Australian Public Service, September 2003.