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2007 State of the Service Report”

Presentation by Lynelle Briggs
Australian Public Service Commissioner
Canberra ELs briefing,
19 March 2008

Introduction

Before I begin I would like to acknowledge the Ngunnawal people and their ancestors as the traditional owners of the land on which we are meeting today.

I am pleased to be here today to discuss the major issues facing the Australian Public Service and to share with you some of the findings of the 2007 State of the Service report.

The State of the Service report evaluates independently the activities and operational practices of APS agencies over the last year, and showcases their achievements.

Last year, the report was formally recognised by a United Nations Public Service Award. The United Nations said that the State of the Service report should be an inspiration and encouragement for others working in the public service.

Workforce profile

The State of the Service report paints a picture of a world of work that has changed dramatically over the past two decades. The pace of APS life is now faster, complexity and contestability is greater, expectations are higher, and the long-term boom in our economy is fuelling an unprecedented demand for skills.

Staffing

One of the changes that has received the most attention is the size of the APS. The requirement to implement a range of Howard Government initiatives saw the APS grow by 5.9% in the last year when adjusted for machinery of government changes. This follows a general upwards trend over recent years as the previous Government extended the range of services, programmes and regulations it provided through the APS.

It is important that we see the recent growth in APS numbers in the context of broader employment trends. The APS currently accounts for about two-thirds of the Commonwealth public sector. The broader Commonwealth public sector has declined by 35% since 1996. Over this same period, the size of the APS has increased by 8.6%, and the total number of people employed in Australia has risen by 25%.

Structure

Much of the work performed today by the APS is now highly knowledge-based. This change in focus coupled with a reduction in the number of low skill jobs in the APS, has led to a higher classification profile.

Over the last 15 years we have seen a significant increase in the number of employees working at the APS 6 level and above. The APS 6 level is now the biggest staffed level in the public service; exceeding APS 4 for the first time this year. In 2007, APS 6 level employees accounted for 19.9% of ongoing staff.

Over this same time period, while the APS has grown by just under half a per cent (0.4%), the numbers of EL1s and EL2s have increased by 82% and 48% respectively. EL1s now account for 15.6%, and EL2s for 8.1% of our ongoing workforce.

This growth has reflected fundamental changes in the quantity and nature of APS work, such as:

• more value added work—complex policy and intensive personal engagement with users of Government services and service providers
• increasing accountability requirements
• increasing demands for high-level engagement with stakeholders
• the ICT revolution, which has facilitated the automation of routine or lower level jobs and an explosion in the pace and extent of communication
• increasing requirements from Ministers’ offices.

If we examine in more detail the changes over the last 15 years at the APS 1 to EL1 classifications, we can see that there has been a significant shift.

Around 1999 there was a strong increase in the proportion of APS 4s to 6s, which was offset by a similar proportional decrease in APS 1s to 3s. This shift reflects many changes in the APS work environment at that time, including the outsourcing and automating of many functions traditionally performed by staff at lower levels and broad banding of the APS 3 and 4 classifications. Interestingly, it’s also the time when the numbers of women in the APS first exceeded the numbers of men.

Against this backdrop of high value work and an increasing classification profile, there has been an upward trend in the proportion of staff with graduate qualifications.

Over half (53%) of our workforce now holds graduate qualifications. This proportion is likely to increase over time, as almost two-thirds of our new starters this year had graduate qualifications. Our senior staff are particularly well educated, with the large majority of SES (83%) and EL2 (78%) employees holding at least one degree at a bachelor level or higher. A slightly lower proportion of EL1 staff, just over two-thirds, report holding graduate qualifications.

The APS is now also able to draw on a workforce with a much broader range of experiences. In 2006–07, half of all vacant positions were filled by engagements from outside the APS. This compares to a third 15 years ago and stands in stark contrast to the situation in a number of state jurisdictions where only five to ten per cent of vacancies are filled from outside.

Type of work

Public servants are involved in a wide range of work types. The largest proportion, almost a quarter, deliver services to the general public. Other common categories include corporate functions (22%), regulatory work (12%), administrative support (11%), policy (10%) and programme management (9%).

Although executive level staff are most likely to be involved in corporate services work, roles such as policy and programme management are also prominent among this group. EL employees are also less likely than APS 1–6 level staff to be involved in service delivery roles.

Diversity trends

Our workforce is increasingly diverse.

One area of particular strength is our employment of women. The proportion of women in the APS continues to grow. Women account for almost 57% of the APS workforce, and comprise 36% of the Senior Executive Service and 44% of executive level staff. If current trends continue, women’s representation in the SES will equal that of men within a decade and within five years at the executive level.

While these results for women are pleasing, some agencies are now reaching the stage where they need to consider strategies for recruiting and retaining male workers, especially those in younger age groups. It is important that, as far as possible, we maintain a gender balance throughout our classifications.

Other positive diversity results in the last 12 months include:

• the number of employees aged 55 years and over increased by more than double the overall APS growth rate to 11.2%;
• employees aged under 25 years were the fastest growing age group in the APS, now representing 5% of our workforce; and
• the number of Aboriginal and Torres Strait Islander employees increased this year and proportional representation steadied at 2.1%.

Unfortunately, we have had no success with the employment of people with disability—with the decline continuing to 3.3%. We need to improve our performance. As managers, you need to make the implementation of the objectives of the Management Advisory Committee’s report, Employment of People with Disability in the APS, a priority. The Commission has recently developed the toolkit Ability at Work: Tapping the Talent of People with Disability to assist you in meeting these objectives.

Where we are going well

There are a number of areas where the APS is performing particularly well.

Employee engagement

For the second consecutive year, results from the State of the Service employee survey suggest that employees across the APS are highly engaged with their agency and with their work.

Employees were most satisfied with their understanding of their current role, their work group and their current job. These are particularly significant results given that there is a strong link between them and employees’ views about their productivity.

Employees were least satisfied in the areas of agency culture, merit, career and development opportunities and senior leaders. These are areas where we can focus to further improve employees’ levels of engagement.

EL1 and EL2 employees were not uniformly more or less satisfied than employees at other classification levels. Both EL1 and EL2 employees were more satisfied with their current job than other employees, but less satisfied with diversity. And although, EL2s were also more satisfied with merit, they were less satisfied with work-life balance. EL1s on the other hand, reported higher levels of satisfaction with career and development opportunities.

Pride

Another extremely positive result is the high levels of pride APS employees have in working both in the APS and in their individual agencies. Seventy nine per cent of employees agreed they were proud to work for the APS. Sixty nine per cent were proud to work for their agency.

On the back of this result, it is not surprising that 81% of employees would recommend the APS as a good place to work.  This stunning figure is very important, as research tells us that existing employees represent the most credible source of information to potential candidates about jobs in their organisations.

In general, ELs hold similar views to employees at other classification levels; however, EL1s report slightly higher levels of pride in working for their agency.

Organisational productivity

Positive results in employee perceptions are matched by real improvements in APS performance. Over the last few years the APS has shown high levels of productivity growth.

APS agencies have needed to find cost savings of around 1.75% per annum, over and above budget supplementation, to meet increases in employee wages; and

since 1987–88 cost savings have been appropriated by governments by means of the efficiency dividend, which rose from 1 to 1.25% per annum in 2005–06.

The APS’s results are better than productivity movements across the economy as a whole. Over the last decade average labour productivity in the Australian economy generally has increased by 1.8% per annum and by 2.2% per annum in the market sector.

High levels of overall productivity growth in the APS are based on high levels of personal productivity. Over half (55%) of our APS employees reported that their personal productivity had improved in the last 12 months.

Despite these good results we need to sustain a continual focus on productivity improvement to meet the Rudd Government’s extra demands.

One important influence on productivity that we looked at for the first time this year is levels of workplace absence. Our results indicate an appalling APS-wide absence rate of 9.4 days per person in 2006–07.

There has been little change in these results since the ANAO’s audit of agencies’ unscheduled leave in 2003. While some agencies have been successful at sustaining low rates of absence or reducing absenteeism, this is an area where there is considerable potential for agencies to improve their performance.

As managers and leaders you have a particularly important role to play in fostering an attendance culture. Part of this approach is ensuring staff know your expectations about how to report in if they are absent. More importantly, you need to actively motivate your staff to do their best possible work and to go that extra mile.

Where we need to focus moving forward

So far I have focused largely on areas where we are going well, but there are five areas that require our attention to ensure that we remain a high-performing institution. The SES and EL levels need to be actively involved in addressing these challenges.  

Agency Health and Agency Culture

The first challenge is a need for a greater focus on APS agencies’ corporate health. 

Corporate health is a measure of the effectiveness of agency governance, and covers areas such as:  organisational direction, leadership capability, organisational capacity, corporate governance processes, relationships and integrity, and agency culture.

The importance of monitoring corporate health is self evident. High levels of corporate health are linked directly to high levels of overall performance. Poor corporate health can lay the foundations for poor performance. We need to identify and address early warning signs of poor corporate health well before they start to affect the achievement of outcomes.

This year’s report indicates that one area requiring significant attention is the creation of an effective organisational culture—one that encourages high quality performance, continuous improvement, empowerment of staff and trust. I am worried that creating such a culture still appears to be an issue in some agencies.

This year’s report found relatively low rates of employee satisfaction with various elements of agency culture. Less than half of employees across the nation reported satisfaction with feeling valued for their contribution, and their level of involvement in decision-making, change management and the management of underperformance.  I am particularly concerned about the lower levels of satisfaction among EL1s and 2s about how performance and change are handled—especially given your important roles in shaping your agency’s culture.  These results are unsatisfactory and there is clearly some work to be done here.

It is likely that over the next 12 months we will see considerable change in the way we work and the make-up of some of our agencies. A strong culture and good corporate health will help us successfully navigate and manage the change ahead.

Last year I launched the Commission’s Contemporary Government Challenges series, and two publications in that series are designed to help agencies to address corporate health. The first, Agency Health—Monitoring and Improving Performance, provides both a checklist and a range of case studies designed to help monitor and improve both systems and culture.

The second publication, Building Better Governance, identifies seven building blocks to better governance:

• strong leadership, culture and communication;
• appropriate governance committee structures;
• clear accountability mechanisms;
• working effectively across organisational boundaries;
• comprehensive risk management, compliance and assurance systems;
• strategic planning, performance monitoring and evaluation; and
• flexible and evolving principles-based systems.

The key message in the publication is that better governance is the responsibility of everybody in the APS.

I am pleased to say that we found considerable evidence this year that agencies are taking governance seriously, and that the majority of employees are also satisfied with their agency’s efforts.

Nevertheless, rigorous ongoing attention to governance issues is required to ensure that we avoid the occasional serious lapses in performance that have caused considerable damage to the reputation of the APS. There is no room for complacency.

New Ways of Doing Business

The second critical challenge is building organisational capacity to support new ways of doing business. The Prime Minister has spoken of new approaches to enduring problems, and we have already seen his Government’s willingness to get on the front foot and propose new ways to tackle difficult issues—the COAG cross jurisdictional working groups and the 2020 summit are just two examples. He is particularly keen for us to provide the Government with “fresh ideas”—and we need to rise to this challenge.

Even without new initiatives, we have already seen a shift in the way public services are delivered. Expenditure on the delivery of services by third parties now makes up a significant proportion of total Australian Government expenditure. At least $40 billion, or 18% of the total Australian Government Budget, was spent on third party service provision last year. More than half of this money went to non-government organisations.

The APS has improved significantly its capacity to implement more innovative ways of working over the last few years. Some examples include whole of government responses to major challenges such as Indigenous disadvantage, and more active engagement with the community in order to change behaviour and develop solutions to public policy problems, such as land degradation or public health issues.

Despite significant progress, establishing new ways of working in the APS raises a number of challenges. There are a number of areas that require attention and action. Of our EL and SES employees involved in whole of government work:

• only 27% believe that financial and accountability arrangements usually facilitate whole of government work
• only 29% believe that their agency’s performance management system usually recognises or rewards whole of government outcomes adequately, and
• only 32% believe that ICT systems are usually sufficiently compatible to support whole of government work.

These are far from positive results. It is important that senior leaders take the lead in making collaboration work across organisational boundaries and in fostering a culture where innovation is the norm.

The complex issues the Government expects us to address make working differently an imperative. At an organisational level, we need to develop genuine insight mechanisms within and across agencies to help understand the experience of those who use our services. We also need to focus on improving our ability to implement our new ideas.

The MAC Report Connecting Government remains a key document in this regard. Two additional publications in the Contemporary Government Challenges series—Tackling Wicked Problems and Changing Behaviour—will help stimulate debate about how to encourage government and public servants to make the best choices in addressing complex policy problems.

Modernising APS Employment

To ensure that the APS has the organisational capacity to implement new ways of working, we need modern employment arrangements that allow us to attract and develop a diverse array of people with a range of different skills. This is the third critical challenge identified in this year’s report.

Skills shortages

Skills shortages have had a noticeable impact on agencies’ ability to achieve outcomes. Most agencies (88%) have had difficulties in recruiting people with required skills, in particular ICT, financial management, accounting, HR and project management.

While I know that the Government’s public service cuts will relieve the problem, when considered in the light of the ageing APS workforce and the highly competitive employment market, it is essential that we position the APS as a modern, flexible and attractive employer. This requires action on a number of fronts.

Recruitment Processes

Firstly, there is significant potential to streamline our approaches to recruitment. The current legislation doesn’t prescribe lengthy or complex recruitment processes and provides agencies with considerable flexibility. Given this, the findings in this year’s report about the excessive length of recruitment processes are disappointing, if not surprising.

Of the employees who applied for a job in the APS in the last 12 months, only half indicated that the process took less than two months¹. Thirteen per cent of relevant employees reported that the processes had taken more than four months.

In too many agencies, lengthy recruitment processes appear to result from confusion on the ground between the application of merit as required by legislation and rigorous adherence to detailed internal processes. In today’s competitive labour market, high-quality candidates will not, nor should they be expected to, wait for three months or more for us to finish a recruitment exercise. We need to make improving our performance here a priority.

Attraction

A second component of a modern approach to APS employment is insightful marketing that highlights the things that matter most to the people we are trying to attract.

For the first time this year we asked employees what attracted them to their current roles. Across the APS, the most important attraction factors were: job security, interests that match the job, location, career opportunities and a desire to gain experience in the APS.

Executive level employees reported the same top four attraction factors as the APS as a whole, but with interests matching the job more popular and job security less popular among ELs.  Executive level employees were also more likely to place greater importance on working on ‘leading edge’ projects than APS employees Australia-wide.

These differences highlight to agencies the importance of identifying the factors that attract different types of employees, and taking a more sophisticated approach to marketing their agencies to these potential applicants.

Remuneration

Perhaps, somewhat surprisingly, remuneration only ranked 6^th APS-wide as an attraction factor. It had a similar ranking in terms of its importance as a retention factor. Nevertheless, it is important that the APS is able to provide at least moderately competitive remuneration packages to attract and retain the highest quality staff.

Although APS remuneration increases were generally in line with other sectors in 2006, our levels of remuneration are generally well below comparative positions in the private sector. APS employees are remunerated at lower rates at all classification levels, except APS 1 and 2.

These lower remuneration rates do not yet appear to have had a significant impact on our ability to recruit from outside the APS, but is an issue that we will need to monitor carefully.

Corporate Areas

An important theme coming through the State of the Service report this year is the role that agencies’ corporate areas play in establishing modern approaches to APS employment and in supporting line areas to achieve their goals. It is important that corporate areas see themselves as drivers and supporters of business improvement.

One area where there appears to be significant room for improvement is in establishing effective internal administrative processes. Streamlining administrative processes, along with better internal communication, the recruitment of high-quality employees and a culture that supports a better prioritisation of work and focuses on these priorities, were the four actions most commonly nominated by SES and EL 2 staff as having the potential to increase the efficiency and effectiveness of their agency.

Putting a priority on developing the quality and depth of our corporate areas is essential to support improvement in these areas.

Interactions with Government

There have been changes in the way that the public service interacts with, and supports, the Government. This is the focus of the fourth challenge for the APS identified in this year’s State of the Service report.

I believe it is time to look more closely at the interaction between public servants and Ministers to see whether we can better clarify public service and ministerial accountabilities.  A particular issue here is the significant role that Ministerial advisers play in the relationship between Ministers and public servants.

There has also been continuing debate over the way in which the public service manages the requirement for it to be both apolitical and responsive to the Government of the day. I welcome this debate but it must be based on an informed understanding of the role of the APS—the APS is not and should not be seen as an independent arbiter of public interest. Sound government will always be based on a strong partnership between public servants, Ministers and their advisers underpinned by a clear understanding of their respective roles and open communication.

The new Government recognises this and has established new standards of Ministerial conduct; will have a Code of Conduct for Ministerial advisers; and has introduced mandatory training for advisers.

The public service needs to evolve in a way that allows it to manage contemporary circumstances and serve governments of whatever political colour effectively, without crossing the line into political behaviour.

One way of achieving this is through effective training for public servants on their role and their obligations under the APS Values. I believe that it should be mandatory for all newly engaged public servants to do the online APS Induction Programme because this will provide them with information about working in the APS, including the ethical framework and institutional underpinnings of the Westminster system of government in Australia. Agency Heads should make this mandatory for all new starters, and I hope that each one of you will ensure that all your new staff undertake this programme.

Leadership

The final challenge identified in this year’s State of the Service report is the need for strong and effective leadership. All of the challenges referred to already will only be effectively addressed with such leadership.

Before turning to broader APS-wide leadership issues and challenges, I want to focus on leadership at the middle manager level.

EL2 Group

The 2007 report includes an examination of the EL2 group and their importance to APS performance. This is not to discount the important role EL1s have to play in keeping the APS as a high performing institution.

However, the EL 2 role is of particular significance—EL 2s are the conduit responsible for translating and reinforcing important messages about organisational direction from the senior leadership to more junior employees on a daily basis.  They play a key role in terms of their technical skills and business knowledge, and are the group we look to for their potential as future senior leaders.  In many agencies it is EL 2s who have first-line people management responsibilities.  Even where these responsibilities are devolved to lower levels, it is the EL 2s who are responsible for ensuring delivery of Government outcomes, and who report directly to senior management.

Overall, our analysis of the EL2 group found that EL2s tend to have long lengths of service in the agency in which they have been promoted, but limited experience at the EL2 level itself. We also found that their overall median length of service before becoming an EL2 has fallen from 12.2 years in 1998 to 10.1 years in 2007. Length of service as an EL2 in any agency has also fallen, from 6.6 years in 1998 to 4.2 years in 2007.

In assessing these results, it is important to recognise that APS experience is just one part of the picture.  The opening up of the APS employment framework over the last decade means that increasingly, people from outside the APS are joining at the executive levels—33% of employees new to the EL2 role in 2006–07 joined from outside the APS. This compares with only 16% in 1997–98.

Although the increased level of engagements at the EL2 classification presents significant opportunities to enhance APS performance; it also brings with it new challenges.  If you are newly engaged to the APS at the executive level, it is important that you receive appropriate training, guidance and support so that you understand the issues that make the APS unique.  This includes making sure you are abreast of issues such as, public service probity, accountability requirements, dealing with Ministers’ Offices, the APS Values, the Code of Conduct, and the application of merit in selection processes.

We also found that executive level staff had very different views about their identity compared to other employees. EL staff were less likely to consider that they were primarily APS employees and more likely to consider themselves as primarily employees of their agency than both the employees they manage (APS 1–6 employees) and their senior leaders (SES employees). This may in part, reflect the lack of experience ELs have outside their current agency. It is also likely to reflect the particular role of ELs and their responsibility for departmental programmes and projects.

Nevertheless, this result is worrying—especially given the important place that executive level employees have in the carriers of both the APS and their agency’s culture—and the relatively poor results for agency culture that I have already spoken about. ELs need to understand their roles and get into the right mindset.

Executive level staff are an important point of leverage in relation to cultural change within an organisation, and they should be at the forefront of change, and of encouraging more collaborative approaches.

The findings from this year’s report continue to support the need for a greater investment in the leadership capability of the EL 2 group. Fifty-seven per cent of agencies report at least one skills gap in their SES feeder group.

They also suggest a need to better engage EL 2s in the leadership of their agency and to build much stronger links between senior and middle management.

Leadership capabilities

I am, however, pleased that this year we have seen improvements in employees’ assessment of the leadership capabilities of their supervisors, and a particular improvement in views about strategic thinking capability.

The improvement in the area of shaping strategic thinking is especially pleasing in light of the strong agency and whole-of-APS focus on this issue.

There have also been some improvements in perceptions of senior leaders more generally. Despite these improvements, employees’ perceptions of senior leaders continue to be less favourable than those of their immediate managers.  To some extent I see this as inevitable, and simply reflects the greater distance between employees and their senior managers. Although, the relatively high levels of agreement in some agencies show that it is possible to improve employees’ perceptions of senior leaders. Our APS-wide results, nonetheless, suggest that all agencies could do more to improve the effectiveness of communication between senior leaders and their employees.

Broader leadership issues

At a broader level, the role of APS leaders is changing. There is now greater emphasis on our leaders connecting, guiding, directing and coordinating, as more government services are provided collaboratively or through third parties, and more emphasis is placed on working with the community to address complex policy issues.

It follows that the skills required of our leaders in this new environment are also changing. They go beyond the traditional, yet still important, high-level analytical, conceptual, regulatory and project management skills.

The new leadership style is characterised by a willingness to think and work in new, innovative and more entrepreneurial ways, and to reward flexibility and creativity. It is marked by holistic, rather than partial or linear, thinking and by collaboration across organisational boundaries. New leadership puts a much greater emphasis on relationship management. It tolerates uncertainty, and accepts the need for a long-term focus in dealing with many of the complex policy problems that we face.

Although the role of senior leaders is crucial, leadership goes beyond this group.  It is the responsibility of every public servant to ensure that the APS remains a high-performing institution.

The new Rudd Government presents significant opportunities for the APS. How we respond to these opportunities will have major implications for our relevance. It will help to determine whether Australia can reap the long-term benefits of a period of unprecedented economic boom and make real headway in addressing some of our intractable policy problems. It will position us for continued success into the future.

 

1 That is, the time from when they submitted their application to when they were offered the job or were advised they had been unsuccessful.

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