Commissioner’s overview

The State of the Service report on the Australian Public Service (APS) is the key mechanism for providing the government and the parliament with a picture of how well the APS is performing. It examines employees and agencies that are covered by the Public Service Act 1999 and account for over two-thirds of the Australian Government public sector.¹ The report identifies APS agencies’ strengths and achievements and captures the views of employees and agencies on future challenges. Because this is the report’s twelfth year, it also provides an indication of important trends.

It has been a challenging year for the APS, with the need to respond quickly and effectively to the global financial crisis, as well as to continue supporting the government’s reform agenda. The first half of the year was dominated by work across agencies, and with other levels of government, to cushion Australia from the impact of the global financial crisis. Other new and unexpected challenges were also addressed, including the Victorian bushfires, the floods in north-eastern Queensland, and the outbreak of the H1N1 human swine flu virus. At the same time, reforms across a range of key areas were progressed, including health care, education, the environment, and innovation. More examples of agency achievements in 2008–09 are detailed in Appendix 1.²

APS reform

In September 2009, the Prime Minister, the Hon. Kevin Rudd MP, outlined his aspirations to make the APS ‘the best public service in the world’.³ An Advisory Group, led by the Secretary of the Department of the Prime Minister and Cabinet, Mr Terry Moran, will prepare an APS reform blueprint in early 2010 to achieve this goal. The reform blueprint will use the results of an international benchmarking study that compares APS performance to that of other public services around the world.

In developing the reform blueprint, the Advisory Group will consider reforms to promote:

• a values-driven culture that retains public trust
• high quality, forward looking and creative policy advice
• high quality, effective programs and services focused on the needs of citizens
• flexibility and agility
• efficiency in all aspects of government operations.

The Reform of Australian Government Administration: Building the World’s Best Public Service discussion paper highlights that reform will be more efficient and effective if these issues are tackled using a whole of government and across-APS strategic approach. In announcing the APS reform initiative, the Prime Minister made clear that the Advisory Group, in formulating the reform blueprint, would:

…assess the core challenge of how to strengthen service delivery and measurement, how to foster a greater sense of cohesion and esprit de corps across the APS, how to attract the best people from outside the public service, and how to make the most of the great talent inside the service.

A specific priority will be a renewed and major investment in education and development of employees, in order to build strategic leadership across the APS.³

This year’s State of the Service report themes are highly relevant in this context. They are:

• building workforce capability
• leading for the future
• working with others to shape a stronger future
• building trust.

The key findings and challenges of each theme are set out below.

Building workforce capability

Examining ways to ensure the APS has the best possible workforce will be a key element of the reform process.

A workforce snapshot

During 2008–09, the APS continued to grow slowly (1.4%); it now has 162,009 employees. Growth was concentrated in agencies whose work was directly linked to addressing global issues (such as Centrelink; the Department of the Environment, Water, Heritage and the Arts; and the Department of Families, Housing, Community Services and Indigenous Affairs). The trend towards a higher classification profile has continued, along with that towards a more feminised and educated workforce. The classifications that grew most during the year were the EL and SES cohorts (up 5.7% and 5.4%, respectively, for ongoing employees).

The proportion of employees reporting they work in service delivery, or related roles, has fallen to 20% across the APS (previously 24%). The number of employees reporting they worked in policy (12%) and regulatory roles (11%) also varied (previously 10% and 13%, respectively), but by smaller amounts. As employees become more senior, they are more likely to identify their roles as being in policy and regulatory functions. They are also more likely to be located in the Australian Capital Territory (ACT). Consistent with trends over the past few years, just over 60% of the APS workforce is located outside the ACT.

Across the APS, workforce diversity remains a key issue. Diversity is important if the APS is to improve its capacity to develop policy and services that better meet citizens’ needs. Representation of young people (aged less than 25 years) fell for the second year in a row and now accounts for 4.6% of all ongoing employees. Representation of Indigenous employees remained constant at 2.1% and the proportion of employees with disability fell to 3.0%.

The key issue relating to Indigenous employees will be how APS agencies can more effectively support the new Council of Australian Governments’ targets for Indigenous employment: a goal of 2.6% employment for the APS by 2015 has been set. For people with disability, the APS also has a key role to play in supporting the National Mental Health and Disability Employment Strategy, and in continuing to actively implement the Management Advisory Committee objectives to improve employment opportunities for people with disability.

The mobility rates for all employees were lower than in 2007–08, and it appears that APS employees in 2009 have worked in fewer agencies than their counterparts in 2000. As employees move to higher classifications, they are more likely to have gained experience in more than one agency. However, the number of SES who have worked in only one agency is also growing (37.4% in 2000, and now 45.4%).

Challenges

APS agencies have identified three key challenges they face in building workforce capability, namely:

• increasing the capacity to manage organisational change or changes to functions and workloads
• improving the ability to attract and retain appropriately skilled employees
• developing capable leaders, managing succession, and knowledge management.

Managing organisational change will be particularly important for the APS in future, as it implements the recommendations of the APS reform blueprint. An important means of ensuring that agencies can anticipate and respond to events that affect their workforces is to engage in workforce planning and to implement appropriate strategies. This year, 30 of 95 agencies reported having a documented workforce plan (covering 53% of APS employees). A key part of workforce planning must also be to identify workforce risks. This appears to be done fairly frequently (by just over two-thirds of all agencies).

The second key workforce challenge APS agencies identified is the ability to attract and retain appropriately skilled employees. This was due to their limited capacity to offer desirable career paths and development opportunities, as well as an inability to maintain salary levels and competitiveness in the labour market, which were associated with budget constraints.

Effective recruitment processes that can quickly secure the right person for the job are a first step in addressing this challenge. While some APS agencies have improved their recruitment processes, many are still too lengthy; the average time taken to finalise offers of employment in the APS is 61 days. The agency survey showed that many agencies are reviewing how they can improve performance in this area, including using e-recruitment. Agencies are also using various approaches to implement retention strategies in order to support their recruitment initiatives, including professional development, flexible work arrangements and building a positive workplace culture.

While separations eased during the year, almost one in five employees (21%) indicated they intend to leave their agency in the next two years, although over half of these intended to pursue a job in another APS agency.

The most pressing professional skills shortages that continue to be reported in the APS remain those in the areas of information and communications technology (ICT; 34% of agencies), high-level policy/research (29%), accounting (25%) and financial management (23%). In some areas, the skills gap pressures seem to have eased, including for ICT employees, but this may be a reflection of external factors.

The third key challenge agencies identified is that of developing capable leaders, managing succession and knowledge management. Leaders are important in building workforce capability: good leaders help drive change and foster a high-performing, innovative and collaborative workforce culture.

However, future leaders need to be developed and succession must be actively managed. Only a small number of agencies reported having active talent management strategies in place (now 8% compared to 6% last year); however, the number of agencies reporting they are developing talent management strategies has risen (now 36%). There is a greater focus on succession management; 36% of agencies now have succession plans in place, an increase of 10% on last year. This may reflect the increasing pressure arising from the fact that around 45% of the SES will become eligible to retire in the next five years, and that overall, the APS is grappling with an ageing workforce.

Learning and development activities are an essential component of both active talent management and succession management strategies. Although they are an investment for agencies, and can help build future workforce capability, agency expenditure on learning and development fell in 2008–09.

Leading for the future

The imperatives for improving APS leadership capability are intensifying. The Prime Minister has indicated the need to ‘build strategic leadership across the APS’ as well as a greater sense of cohesion and esprit de corps.³ These demands reflect the increasing expectations the government is placing on APS leaders to meet the strategic challenges of greater economic uncertainty, globalisation, policy complexity and rapid technological change, as well as increased citizen expectations.

SES profile

The SES was first established 25 years ago. Since then, the number of SES employees has increased to 2,845, a rise from 1.0% to 1.9% of the overall APS workforce. The key feeder group (EL 2s) has also grown significantly: there are now 12,950 ongoing EL 2 employees.

Consistent with the broader APS workforce trends, SES and EL 2 employees are ageing and more feminised; and many hold tertiary qualifications. As noted, compared to other APS employees, SES employees are more likely to have had experience across different agencies, but a growing number have experience in only one agency.

The SES leadership group is highly engaged and motivated, and employees reported being een ‘to make a difference’, although they were generally finding it more difficult than other APS employees to achieve a satisfactory work-life balance.

Nevertheless, some issues may need to be addressed in order to ensure considerable future expectations of APS leaders are fulfilled.

Meeting future expectations

There was a perception gap between how positively the SES cohort viewed themselves as leaders and how other APS employees perceived them. The views of the SES were more positive than the views of others. Although this gap may reflect the ‘distance’ between SES and other APS employees, it has persisted. Employees frequently identified better communication as a way of improving APS leadership performance. Furthermore, when employees were asked about how to better position the APS for the future, they identified ‘more effective leadership’ and ‘a culture within their agency where leaders engage with and mentor employees’ as two of the top four actions.

Similarly, agencies continue to identify people management skills as an area in which leaders need to make further improvement, along with the capacity to steer and implement change and to think strategically.

Another common issue identified in relation to the SES was the need to build a more cohesive senior leadership cadre. This is considered important for building better collaboration in policy development, program design and service delivery arrangements.

However, in 2008–09 the proportion of SES employees (39%) who definitely saw themselves as part of a broader APS leadership cadre did not increase. Possible reasons the SES nominated to explain such results included the diverse nature of work across the APS, a lack of leadership opportunities outside their agency, and agency-focused performance assessment.

In order to address these shortcomings, the APS needs to reconsider its strategies to grow and support leaders. Within agencies, a range of methods is employed to identify talent and provide support for building SES capability (such as learning and development, coaching and structured learning). However, these initiatives are generally not yet part of an active talent management strategy, one that in turn supports an active workforce planning strategy. It may also be that a more coordinated cross-APS talent management approach is needed in order to create a more unified senior leadership cadre.

Fostering employee engagement

Senior leaders’ performance is also an important lever for enhancing employee engagement and improving overall APS productivity. Employees generally appeared to be highly satisfied (80%) and highly motivated (87%). The factors that drive employee engagement in the APS have been identified and are, in order of level of satisfaction:

• goal clarity
• team performance and relationships
• immediate manager
• intrinsic rewards
• autonomy/empowerment
• work-life balance
• performance feedback/accountability
• learning and development
• job-skills match
• agency culture
• remuneration
• recognition and feeling valued
• senior leaders
• career progression.

Over half of APS employees were satisfied with 10 of these 14 engagement factors. Employees were most satisfied in the areas of goal clarity; team performance and relationships; immediate manager; and intrinsic rewards. They were least satisfied with support for career progression; senior leaders; recognition and feeling valued; and remuneration. Regression analysis of the data also revealed that the main areas where agencies could focus their efforts to enhance employee engagement are those of agency culture, performance feedback and senior leaders.

Working with others to shape a stronger future

The complexity and depth of the strategic challenges governments and public services around the world face require sophisticated, new and innovative policy solutions, as well as collaborative approaches to policy-making and service delivery. The APS reform process has also identified placing citizens at the centre of both these endeavours as a key priority. However, and particularly in light of the global financial crisis, a strong imperative remains for the APS to ensure all of its operations are as efficient and effective as possible.

Enhancing policy capability

Across the APS, a range of measures appears to have been implemented or further consolidated to enhance policy-making capability, and to ensure it is strategic, more innovative and collaborative. Placing citizens more firmly at the centre of service delivery arrangements has also been a continuing focus.

A number of agencies have implemented new structural arrangements, focused particularly on coordination and strategic policy, to enhance their capacity for strategic policy development. The government considers that the public service should play a lead role in the national innovation system, and APS-wide projects to support a stronger innovation culture have commenced. Employee survey data this year showed some positive results in terms of employees’ perceptions of how well their agencies and senior leaders were supporting them in advancing and trialling new ideas. These results are pleasing but point to a continuing need for further improvement in order to progress to an innovation culture.

Collaborating with stakeholders is another key requirement in ensuring that policy development and service delivery are better able to meet the demands of modern governance. In 2009, the government placed strong reliance on COAG to progress major reforms in key areas, as well as to underpin the quick roll out of measures designed to address the effects of the global financial crisis. Across many government agencies, additional measures were implemented to support and strengthen collaboration opportunities as well as leverage new technology to enable better information sharing.

Employees reported broadly similar levels of cross-government collaboration to previous years, but were less positive about whether there is appropriate support for them to work well with other government partners. Agencies and employees are continuing to work with non-government partners in a variety of ways, but survey findings also suggested there was room for improvement in how the APS supports this type of collaboration.

Improving service delivery

APS agencies are actively harnessing ICT to help provide better services to, and support stronger engagement with, citizens. During 2008–09, a number of agencies used online forums to encourage discussion and collect views from the public and specific audiences on policy issues. Agencies continue to collect feedback directly from service users on their levels of satisfaction with those services, in order to improve service delivery arrangements for citizens. How well agencies are designing and delivering services built around citizens’ needs has been identified as a key focus of the APS reform process.

Operating more efficiently

Another key priority of the reform process will be to examine how to enhance the efficiency and effectiveness of APS operations. Through the Budget framework, measures are already in place to limit expenditure growth across agencies. Agencies and employees have reported on initiatives aimed at improving their efficiency and effectiveness, now and in the future. A key area needing further consideration is how employee costs are managed, and how issues such as unscheduled absences are addressed in workplaces, given the adverse effect this can have on agency and employee productivity. Both agencies and employees recognised that improving APS performance in this area, particularly improving administrative processes and reducing red tape, was critical to ensuring the APS can better meet future challenges.

Building trust

Compared with other countries, available data suggests that the APS performs well in terms of perceptions of the quality and independence of its public administration. To make the best public service in the world, the APS must maintain ‘a culture of honesty, impartiality and fairness, with a focus on retaining public trust’.3 A solid ethics infrastructure that advances transparency and accountability in public administration is critical to sustaining public trust; and it must be supported by an APS that conducts government business based on the desired values and standards of behaviour enunciated by the APS Values and Code of Conduct.

Strengthening accountability and transparency

Recent government measures have focused on improving access by members of the public to the machinery of government administration. This has involved an extensive program of review of the legislation governing these matters, including privacy, freedom of information, whistleblowing and secrecy. Progress in each of these areas has been significant and is discussed in Chapter 8.

These reforms complement the integrity measures already introduced during 2008, including the revised set of Standards of Ministerial Ethics, codes of conduct for both ministerial advisers and lobbyists, and the Register of Lobbyists. While these measures are new, many of the principles within them should be familiar to experienced public servants; this year’s data however suggests a need for increased awareness.

The data shows SES and EL employees are managing well in terms of balancing the need to be apolitical, impartial and professional, responsive to government, and openly accountable when dealing with Ministers and/or Ministers’ offices. Twenty-four per cent of SES and EL employees agreed they have been faced with this challenge, around the same level as last year but considerably lower than the 41% agreement by SES and EL employees in the 2003–04 and 2004–05 surveys.

An ethical culture

The data shows a public service that is used to working within a defined ethical framework. APS employees indicated they have a very high level of awareness of the APS Values and Code of Conduct and that, for the most part, they are confident both they and their colleagues at all levels act in a manner consistent with them. Seventy-seven per cent also reported that the most senior managers in their agencies act in accordance with the APS Values, with only 7% disagreeing. These results are important given the distinctive roles of leaders in effective implementation of a values-based management system.

Misconduct in the APS is at very low levels—about three in 1,000 APS employees were determined to have breached the Code of Conduct in 2008–09—and is overwhelmingly characterised by acts of poor individual judgement rather than systemic misbehaviour, maladministration or corruption.

However, some challenges lie ahead. A number of APS employees indicated a reluctance to report misconduct and it is critical that agencies do not disregard the importance of striving to embed an ethical culture, including by facilitating reporting of misconduct in their organisation.

Additional support for agencies and employees was provided during the year, with the establishment of the Commission’s Ethics Advisory Service.

This support is timely given the emerging issues that may provide new ethical challenges, including the increasing pressures and opportunities arising from greater government engagement with citizens, and using new platforms, such as Web 2.0, to support that engagement. The fast-paced and rapidly changing complex policy environment may also bring new challenges.

APS views on the future

For this year’s State of the Service report, employees and agencies provided their views on how the APS could best meet future challenges. Strong parallels are clear between the views of APS employees about the future, and key focus areas for developing the APS reform blueprint. Employees most commonly suggested that to remain effective they would need to make sure they are adequately equipped to be able to survive and deliver in a rapidly changing world; have strong leadership and management skills; be able to nurture internal and external relationships; and be able to harness information and embrace opportunities.

To better prepare for the future, employees considered their agencies would need to ensure a culture in which leaders engage and mentor employees; leadership is more effective; administration processes are streamlined; and high-quality and talented people are recruited.

Agencies also emphasised that preparing for the future would require the APS to focus on recruitment and retention, as well as efficiency, and making sure it successfully builds closer ties with external stakeholders.

These views on the future have been incorporated into the relevant chapter discussions around the themes of this year’s State of the Service report.

Conclusion

The State of the Service Report 2008–09 findings confirm that investing in the APS and its leaders will be critical to its successful reform. They also confirm that a solid basis exists upon which to build and ensure the APS becomes ‘the best public service in the world’.

APS employees continued to have high levels of pride and satisfaction in their work and were also largely happy with their immediate working environment, including their manager and their work-life balance. Senior leaders, too, showed extraordinarily high levels of commitment and aspired to ‘make a difference’. New arrangements have been implemented to help strengthen APS policy capability. Improved service delivery arrangements are also being implemented in a range of different areas, particularly by capturing new opportunities arising from ICT. Importantly, the APS continues to perform well in terms of perceptions of the quality and independence of its public administration.

Some areas where the APS could improve its performance include, for example, the need to better use workforce planning to help build workforce capability. This could also help provide better support for developing APS leaders and managing succession. Building stronger strategic policy capability, including through supporting an innovative and collaborative culture remains desirable, particularly given the strategic challenges that lie ahead. Ensuring services are better shaped to meet citizens’ needs remains an ongoing priority, along with making sure APS operations are as efficient and effective as possible.

The APS reform process provides an important opportunity for all employees to help ensure the APS is shaped and strengthened to meet future challenges.

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