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Last updated: 4 July 2003

The Australian experience of public sector reform

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Chapter 5-Leadership

The importance of strengthening the leadership cadre for the APS was highlighted with the creation of the Senior Executive Service (SES) in 1984.

The emphasis on devolution over the last 20 years also required significant improvements in the skills of senior officers across the Service, initially in financial management and later in people management.

The theme of increased responsiveness to the government was also reflected in a series of changes in arrangements for agency heads.

Promoting better management

A key initiative in 1984 was introduction of the Financial Management Improvement Program (FMIP), with the objective of improving public service management and accountability. Recommended by the Review of Commonwealth Administration and jointly promoted by the Department of Finance and the Public Service Board, the Program aimed to help managers to focus on 'managing for results', rather than directing their efforts to inputs and processes, in order to obtain greater resource efficiency and effectiveness. Underpinning FMIP were the principles of management devolution, improved corporate and business planning, increased public accountability and increased emphasis on evaluation of effective performance. The Program was also associated with increased use of user pays and the development of 'internal markets'.

The initiatives introduced with the FMIP remain influential today in the broad framework of continuing reform and renewal. In particular, 'managing for results' remains a central focus of the Service, and is a key component of leadership development.

The FMIP agenda was progressively extended through collegiate processes under the then Management Advisory Board and its Management Improvement Advisory Committee. A series of reports promoted good practice in a range of areas including people management, ethical conduct, training and development and the management of finances and assets.

The APS Commission and the Australian National Audit Office also directed increasing attention to leadership development and good practice in human resource management. In 1992, the Commission published a Human Resource Management Framework, incorporating strategies for an integrated approach to people management in the workplace and emphasising the crucial link between human resource management policies and practices, and effective corporate management. The Commissioner now has a statutory responsibility for promoting leadership in the APS, and the Commission has developed a contemporary model of the capabilities required of senior executives.

Management and leadership development in the APS is organised by agencies themselves, as well as through the APS Commission (see further below).

Agency heads

Under the 1999 PS Act, agency heads include both Secretaries of departments of State and heads of other agencies with executive, advisory, research and statutory functions. Departmental Secretaries are responsible to their Minister both for departmental management and for advising the Minister in all matters relating to the department. This includes provision of policy advice to the Minister, and implementation and administration of policy. They must also assist their Minister to fulfil his or her accountability obligations to the Parliament. Other agency heads are also responsible to Ministers for administration of their agencies (depending on the specific requirements of the legislation they administer). Their policy advising role is usually limited. All agency heads are required to annually provide a report to their Ministers, for submission to Parliament, on the activities of their agency.

Tenure in an apolitical Service

For most of the last century departmental Secretaries were appointed as permanent employees with tenure, but the introduction in 1984 of an emphasis on greater mobility and an option for fixed term appointments, had gradually led, by further legislative change in 1994, to all Secretaries accepting fixed term appointments.

The new arrangements provide more flexibility for the government to appoint people it considers are best able to meet the responsibilities of Secretary positions and to address the government's policy priorities. The government has always had the power to make Secretary appointments, but permanent tenure constrained its ability to do so. Changes were achieved either by agreement to take alternative appointments, or by some restructuring which led to abolition of the department and creation of a new one.

While there has been some increase in mobility in and out of the APS at Secretary level, the vast majority of Secretaries are career public servants with a proven record of performance.

Agency head selection

Since 1994 Secretaries of departments have been appointed for a fixed term by the Prime Minister for a period of up to five years. The Prime Minister is advised in a report by the Secretary of his department after consultation with the current or anticipated agency Minister. The Public Service Commissioner provides this advice to the Prime Minister in relation to the selection of the Secretary of his department.

Heads of executive agencies are selected and appointed for up to five years by the Minister responsible for the agency function after a report about the vacancy from the Secretary of the Minister's department.

Heads of other government agencies, statutory authorities and government boards are selected and appointed by the Minister responsible for the particular function. The Minister may take advice from the departmental Secretary but there is no legislative or policy requirement that they do so. The means of selection is decided by the relevant Minister. A vacancy may be advertised in the press or a field of applicants may be identified through professional search agencies.

In most cases, Ministers will consult the Prime Minister or the Cabinet before making any of these appointments.

While the majority of agency heads have contracts of up to five years, some are appointed for longer periods under agency legislation (as are the Commissioner of Taxation, the Commonwealth Ombudsman and the Auditor-General). Appointment for a further period after an initial appointment expires is at the discretion of the government.

The issues of tenure were tested in 1999 when tensions arose between a departmental Secretary and his Minister, and his appointment was terminated. The matter was contested in the Federal Court, which found in favour of an entitlement to procedural fairness, and of the Secretary being provided with a statement of reasons for the termination decision, and being afforded an opportunity to respond. But it also confirmed the government's authority to terminate appointments and the limited rights of a Secretary to test the reasons.

Performance assessment of agency heads

The government introduced performance assessment for departmental Secretaries and executive agency heads in 1999. The Prime Minister determines the assessment for each Secretary after receiving advice from the Secretary of his own department and the Public Service Commissioner, who consult with the line Minister. Assessment of each executive agency head is made by their Minister, again on advice from the Secretary of the Prime Minister's department and the Public Service Commissioner, and usually after consultation with the relevant portfolio Secretary.

There are no required criteria for assessment, though there is guidance on the areas to be considered, including meeting the government's objectives for the agency in the whole-of-government context, policy advice to the Minister, management of the agency, leadership and promoting the APS Values.

Secretaries and executive agency heads are eligible for annual performance bonuses not exceeding 15 per cent of their remuneration as a result of these assessments.

Some agency heads with statutory agency powers, such as the Auditor-General and the Public Service Commissioner, are not subject to performance assessment by the government, and receive a standard payment in lieu of performance pay. Some other agency heads are subject to performance assessment by agency boards and may be eligible for performance pay within parameters set by the Remuneration Tribunal, which advises the government on the remuneration of Parliamentarians, judges and agency heads. Ministers are commonly consulted.

A TERRITORY PERSPECTIVE
Agency head agreements In the Northern Territory public service annual performance agreements are signed between Ministers and agency chief executive officers. Each agreement identifies objectives which the Minister and CEO have agreed are aligned with and contributing to government priorities for the 12 month period. Guidelines identify generic performance criteria which relate to human resource and financial management, and service delivery. Portfolio specific criteria are subject to government priorities and agency initiatives. Each performance agreement is endorsed by Cabinet to ensure consistency of approach.

A TERRITORY PERSPECTIVE

Agency head agreements

In the Northern Territory public service annual performance agreements are signed between Ministers and agency chief executive officers. Each agreement identifies objectives which the Minister and CEO have agreed are aligned with and contributing to government priorities for the 12 month period.

Guidelines identify generic performance criteria which relate to human resource and financial management, and service delivery. Portfolio specific criteria are subject to government priorities and agency initiatives. Each performance agreement is endorsed by Cabinet to ensure consistency of approach.

Collegiate forums

The 1999 Act provided for a Management Advisory Committee (MAC) as successor to the Management Advisory Board, established in 1987 to advise the government on public service management issues, and to be a forum for consideration of the management of the Service as a whole. All portfolio Secretaries are members of MAC along with some other agency heads; there are no external members.

Issues recently considered by MAC include performance management, the governance of information and communications technology, and organisational renewal in the APS.

Other, less formal forums also aim to inform and coordinate discussion at senior levels of the Service. Portfolio secretaries meet monthly to discuss current and emerging issues, particularly those arising from Cabinet requiring policy or program coordination. Round Table meetings of portfolio secretaries and major agency heads are also held regularly to discuss issues connected with their roles as employers in the devolved workplace relations environment.

Senior Executive Service

The SES, the leadership cadre of the APS, was created in 1984 to make the Service at senior levels more open, mobile and competitive and to achieve a greater degree of management leadership in development and placement of senior staff. The intent of the legislation was to reshape the cadre of senior employees into a more unified and cohesive group responsible for higher level policy advice, managerial and professional responsibilities. All SES vacancies became open to applicants from outside the Service, as well as from serving officials. Arrangements for staff selection, development, mobility, promotion and tenure were designed specifically to meet common requirements at senior levels. SES staff were to be deployed so as best to meet the requirements of the Service.

Management arrangements for the SES are spelled out in the PS Act:

The function of the SES is to provide a group of APS employees each of whom, within his or her Agency:
(a) provides one or more of the following at a high level:
   (i) professional expertise;
   (ii) policy advice;
   (iii) management; and
(b) promotes co-operation with other Agencies; and
(c) by personal example and other appropriate means, promotes the APS Values and compliance with the code of conduct.

As at June 2002 the SES constituted 1763 staff. The large majority is aged between 40 and 54 with just 11 per cent being younger than 40. Although the proportion of women in the SES has doubled in the last ten years, it is still only 28 per cent.

SES selection

Selection arrangements for the SES operate under a tighter framework than those for non-SES employees. Some aspects are the same-each agency head has the same power to engage, promote, or move people to SES duties, and SES vacancies must be advertised in the . Additional requirements are set out in the Public Service Commissioner's Directions.

These require that each vacancy be advertised in external newspapers or other media, and that each SES selection committee includes an agreed representative of the Commissioner, who must report back at the end of the process certifying that the exercise has satisfied all requirements of the Act and Directions. The Commissioner must endorse this certification before the agency head can proceed with any recruitment or promotion action.

Recruitment to the SES from outside the APS has fluctuated substantially during the last decade-ranging between 14 per cent in 2000-01 to 25 per cent in 1992-93-with no trend becoming apparent.

Like all other APS employee positions, SES staffing decisions by agency heads are not, by law, subject to direction by Ministers. The PS Act (s. 19) states that 'an Agency Head is not subject to direction by any Minister in relation to the exercise of powers . in relation to particular individuals'.

SES redundancies

Like non-SES staff, an SES member may be deemed to be excess to agency requirements. Unlike non-SES staff, the PS Act requires the Public Service Commissioner to agree to the size of the redundancy payment before retirement action can proceed-although the benefit is normally calculated on the same formula as applies in non-SES redundancies. There are also no retention periods applicable to these retirements and the separation date is as agreed between the individual employee and their agency head.

Most SES redundancies occur when agencies restructure their organisations and redeployment is difficult.

Leadership capability

In line with its responsibility to promote leadership in the APS and to support its quality assurance role for SES appointments, the APS Commission developed a framework identifying critical success factors for performance in APS leadership roles now and into the future. This Senior Executive Leadership Capability Framework complements the APS Values by promoting behaviours and relationship management in line with modern requirements that emphasise inspiring and motivating, rather than commanding and enforcing.

The leadership capabilities that comprise the Framework are that the individual:

shapes strategic thinking
achieves results
cultivates productive working relationships
exemplifies personal drive and integrity, and
communicates with influence.

As illustrated below, these capabilities are described in clear language that provides meaningful support for assessment and development.

Figure 11: Senior Executive Leadership Capability Framework jigsaw, representing the five capabilities.

Leadership framework

Assessment against the five capabilities are required by the APS Commission for all recruitment into the SES. They are also used by the Commission for assessing development needs, including through 360-degree feedback (an evaluation process involving co-workers aimed at identifying all aspects of an employee's performance).

A Career Development Assessment Centre has been established to assess members of the SES feeder group, principally EL 2 staff, to help identify their development needs for possible future promotion to the SES. It uses the Senior Executive Leadership Capability Framework in assessing participant performance through a series of formal scenario activities, and in supporting 360 degree feedback. Program participants are provided with detailed feedback to guide their future development.

The Assessment Centre has become an important part of succession planning in the APS, which has been promoted by the APS Commission since 1999-2000.

Leadership development

Management and leadership development initiatives are organized both by individual agencies and the APS Commission. Agencies typically contract external providers to deliver programs specifically linked to their particular business, while the Commission's development programs tend to focus on developing common leadership capabilities that support the strategic focus of the Service.

Commonwealth SES

The APS Commission conducts leadership development programs particularly for the SES. These programs are conducted on a user pays basis (cost recovery is around 95 per cent), and agencies can choose whether to send their employees to these, or whether they prefer to focus on their own internal training, based on their agency business requirements. The core programs offered by the Commission include an orientation program aimed at all new SES appointees, and a Senior Executive Leadership Program involving more substantial and intensive development for those with a few years' SES experience. Other programs include SES breakfasts, SES updates and lunchtime seminars. These are supplemented by SES News, a regular newsletter compiled by the APS Commission. The Commission also offers training in particular areas of management such as project, human resource, and performance management. Programs and services can be customised to meet the particular needs of agencies in a flexible, cost-effective way, and for many government organisations this has become their preferred option.

Participation by SES members in APS-wide leadership development programs can assist them to develop an understanding of the broader agenda beyond their agencies, to develop an appreciation of where their agency goals fit into the goals of the Service, and the impact of government reforms upon the future of the Service. Participation facilitates shared learning, accelerates implementation of effective performance strategies, and encourages managers to build strategic linkages across the Service.

State SES

The states and territories have also invested substantially in leadership and management improvement. Most have established an SES as the leadership cadre.

They have introduced more structured training and development in management, and systems to support management reform. While there are differences between jurisdictions, such as the extent of devolution and the degree of contracting out, the general direction has been consistent with a greater focus on results, competitiveness and leadership.

A STATE GOVERNMENT PERSPECTIVE
Leadership and development in New South Wales A continuing aim of public sector reform in NSW has been a more efficient and productive public sector. The NSW Senior Executive Service was established in 1989 to raise the overall standard of management and leadership in the public sector and to assist in the achievement of continuing productivity increases. The employment of Chief Executive Officers and the SES, who constitute the senior management structure, is governed by a contract of employment between the officer and the employer for a term of up to five years. Contracts include written performance agreements incorporating government targets and involve annual performance reviews. Information gained from these performance reviews assists in executive placement, counselling, and in planning for management development. Policies and programs to support SES officers in achieving performance and career objectives include: a NSW Executive Capabilities Framework-a common set of capabilities reflecting the requirements of individuals in executive roles a Code of conduct and ethics for public sector executives decision-making and standards of executive behaviour an SES mobility system, designed to match officers with opportunities to gain experience in other agencies. Programs to meet the development needs of SES and non-SES officers with executive potential include: an Executive Development Program to develop knowledge and skills in leadership and management techniques the non-government Sydney Leadership Program which brings together senior level managers from private, public and non-profit organisations, to work collaboratively on strategies to address key social, economic and environmental issues affecting communities the nation-wide Public Sector Management Program for middle to senior level managers, and the Management Development Program for Aboriginal People in the Public Sector, which offers a Diploma in Government (Management).

A STATE GOVERNMENT PERSPECTIVE

Leadership and development in New South Wales

A continuing aim of public sector reform in NSW has been a more efficient and productive public sector. The NSW Senior Executive Service was established in 1989 to raise the overall standard of management and leadership in the public sector and to assist in the achievement of continuing productivity increases.

The employment of Chief Executive Officers and the SES, who constitute the senior management structure, is governed by a contract of employment between the officer and the employer for a term of up to five years. Contracts include written performance agreements incorporating government targets and involve annual performance reviews.

Information gained from these performance reviews assists in executive placement, counselling, and in planning for management development.

Policies and programs to support SES officers in achieving performance and career objectives include:

a NSW Executive Capabilities Framework-a common set of capabilities reflecting the requirements of individuals in executive roles
a Code of conduct and ethics for public sector executives decision-making and standards of executive behaviour
an SES mobility system, designed to match officers with opportunities to gain experience in other agencies.

Programs to meet the development needs of SES and non-SES officers with executive potential include:

an Executive Development Program to develop knowledge and skills in leadership and management techniques
the non-government Sydney Leadership Program which brings together senior level managers from private, public and non-profit organisations, to work collaboratively on strategies to address key social, economic and environmental issues affecting communities
the nation-wide Public Sector Management Program for middle to senior level managers, and the Management Development Program for Aboriginal People in the Public Sector, which offers a Diploma in Government (Management).

Senior managers-Executive Level

The APS Commission offers a range of development programs, devised particularly for Executive Level staff, and also arranges in-house leadership and management development activities in areas such as policy change, organisational communication, governance, coaching and mentoring, financial management, and strategic writing. The programs provide staff at this level with development opportunities through a variety of seminars, interactive workshops, and a quarterly electronic newsletter briefing on key APS-wide issues.

The Senior Women in Management Program is a prestigious and unique APS senior officer development program designed for women by the APS Commission. The program has been in operation in various formats since 1988, with between 20 and 30 employees participating each year. It provides high achieving employees with the opportunity to focus on further development through a program that combines high quality coursework, group work and challenging work placements over a 12 month period. It has proven to be highly successful in offering women with potential the opportunity to widen their experience and outlook, and position themselves for future senior appointments.

Development of middle managers and their feeder groups

As well as promoting improvement of the SES and the SES feeder group, programs are conducted by the Commission to improve the skills of middle managers and those who could reach middle management. These programs include:

a year long Public Service Management Program, a joint venture between Commonwealth, state and territory governments which, providing to middle level managers across Australia training in financial management, human resources management, team management and project management
a program for APS 1-6 employees, directed towards developing knowledge and skills in areas such as developing client satisfaction, project and contract management, policy development and communication. The learning objectives of each program have been linked to the competencies within the Public Services Training Package, a nation-wide training and education system, based on agreed standards for public service work
a coordinated series of programs designed for new APS graduate staff to complement individual agency's in-house graduate programs
a program currently being designed to address the particular training and development needs of Aboriginal and Torres Strait Islander APS employees.

A FEDERAL GOVERNMENT PERSPECTIVE
Leadership development in the Department of Defence The Defence 2000 White Paper recommended that the Department of Defence move from a 'bureaucratic culture' to a 'leadership culture'. In response, Defence has been building an improved climate of trust among its 200 or so senior leaders. This is being achieved through cross-functional teamwork, more open channels of communication, and an organisational development strategy tagged 'results through people'. This strategy is aimed at holding leaders to account, not only for the hard-edged results they achieve, but also for the climate they create in their workplaces. The organisational strategy aims to foster a workplace culture that will position Defence, not only to deliver today's results for government, but also to ensure that it has the capacity to sustain this capability over the longer term by drawing on a more diverse talent pool. This 'results through people' approach involves broadening the criteria for leadership beyond technical competence, to include the so-called 'soft skills' such as interpersonal relationships and team building (that are so hard to get right and so easy to get wrong.) An investment in improved staff attitude survey methodologies, more widespread use of 360-degree feedback, and informal 'roundtable' discussions with mixed-rank groups of people are helping improve information about the quality of Defence's senior leadership. Improved information systems enable the Chief of the Defence Force and the Secretary of Defence to direct attention to leaders who have not been taking seriously their individual contribution to a leadership culture that will help Defence win its share of the young men and women entering the workforce in ten years' time.

A FEDERAL GOVERNMENT PERSPECTIVE

Leadership development in the Department of Defence

The Defence 2000 White Paper recommended that the Department of Defence move from a 'bureaucratic culture' to a 'leadership culture'. In response, Defence has been building an improved climate of trust among its 200 or so senior leaders. This is being achieved through cross-functional teamwork, more open channels of communication, and an organisational development strategy tagged 'results through people'. This strategy is aimed at holding leaders to account, not only for the hard-edged results they achieve, but also for the climate they create in their workplaces.

The organisational strategy aims to foster a workplace culture that will position Defence, not only to deliver today's results for government, but also to ensure that it has the capacity to sustain this capability over the longer term by drawing on a more diverse talent pool.

This 'results through people' approach involves broadening the criteria for leadership beyond technical competence, to include the so-called 'soft skills' such as interpersonal relationships and team building (that are so hard to get right and so easy to get wrong.)

An investment in improved staff attitude survey methodologies, more widespread use of 360-degree feedback, and informal 'roundtable' discussions with mixed-rank groups of people are helping improve information about the quality of Defence's senior leadership. Improved information systems enable the Chief of the Defence Force and the Secretary of Defence to direct attention to leaders who have not been taking seriously their individual contribution to a leadership culture that will help Defence win its share of the young men and women entering the workforce in ten years' time.

The Australia and New Zealand School of Government

The Australia and New Zealand School of Government commenced operating in May 2003. It was established by a consortium of the Australian, Victorian, New South Wales, Queensland and New Zealand governments, and various universities. Its aim is to develop a future generation of public sector leaders by equipping them with the policy and management skills for an increasingly complex public service environment. It offers two core programs, a two year Master of Public Administration program aimed at high flying employees in the SES feeder group, and a short, intensive Fellowship program aimed at top, experienced SES officers expected to be candidates for agency head positions.

Building capability

The Commission has been working closely with agencies throughout the Service to address some of the strategic issues around building capability in the APS.

In 2001, it decided to address the development challenges of one particular group of employees, those working in human resource management areas. The role of human resource (HR) practitioners has broadened in the APS as attempts to integrate HR planning, policies and practices increasingly link it with organisational change, workforce planning and achieving business outcomes.

An HR Capability Model, launched in 2001, articulates the capabilities required of effective HR staff in the Service. To support agencies further, and in conjunction with 13 agencies that contributed to its funding and realisation, the Commission designed an HR to assist participants to develop their capabilities against the Model.

The program runs over six months and consists of seven modules. It relies heavily on internal and external mentors to challenge the thinking of participants and apply their learning back to their home agency. A specifically designed 360° feedback questionnaire, which can be used by agencies as a means of identifying the development needs of HR staff, complements the Model

A second initiative addressed a broader audience. A 2002 Australian National Audit Office performance report, Management of learning and development in the APS, identified opportunities in the planning, integration and delivery and evaluation of learning and development. Since then, the Commission has been working in association with the Audit Office to address these issues more rigorously and to inform and influence senior and line managers and those with direct responsibility for learning and development.

A better practice guide, called Building capability-a framework for managing learning processes across the APS; and development in the APS, was prepared jointly with the Audit Office and launched in 2003. It aims to provide a better practice model for a managing learning and development processes across the APS; foster an APS learning culture for better business outcomes; and provide a source of audit criteria for any future evaluation in this area.

Further research into good practice in evaluating and measuring learning and development investment is currently being undertaken.

Further information:

The Senior Executive Service http://www.apsc.gov.au/publications01/ses.pdf

Senior Executive Leadership Capability Framework http://www.apsc.gov.au/selc

SES News is at http://www.apsc.gov.au/ses/

Department of Defence http://www.defence.gov.au

The Australia and New Zealand School of Government http://www.anzsog.edu.au/

Management Advisory Committee's three reports, A strategic framework (2001); Australian government use of information and and (2003) are at http://www.apsc.gov.au/mac

New South Wales Senior Executive Service http://www.premiers.nsw.gov.au/our_library/ses/ses_guidelines/SES%20Introduction%20Index.htm

APSC 2001, HR Capability Model http://www.apsc.gov.au/publications01/hrmodel.htm.

ANAO & APSC 2003, Building capability- a framework for managing learning and development in the APS, http://www.apsc.gov.au/publications03/capability.htm.

ANAO 2002, Management of learning and development in the APS, http://www.anao.gov.au/WebSite.nsf/Publications/4A256AE90015F69BCA256BE4000A3EED