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Talk to Environment SES Conference

Department of the Environment and Heritage
2003 SES Portfolio Planning Conference
Bowral, NSW

A S Podger
26 August 2003

Introduction

• Asked to speak today about corporate governance, public sector leadership and management.
• Without pretending to represent a rigorous academic analysis, I want to put our current challenges and directions into a longer-term and international context.
• My focus will be on:
  • public sector management developments, and
  • changes in approaches towards values and leadership
• In doing so it is important to:
  • appreciate the drivers of change, and the longer-term cycles of change rather than just short-term pressures;
  • remember the classic issues of public administration that always remain with us, no matter the changing context.

Context of recent history

• The Coombs Royal Commission may be over 25 years ago, but its 3 key themes have proved to be of continuing relevance to our reforms
  • increased responsiveness to the elected government;
  • improved efficiency and effectiveness, with increased devolution;
  • increased community participation in government.
• My suspicion is that the forces that shaped Coombs have grown only stronger, in particular,
  • technology driving globalisation;
  • increasing competitive pressures from which the public sector cannot be isolated;
  • increasing community expectations, which are fuelled also by improved education and information;
  • the rate of change itself is increasing (there is growing evidence of this - an example that convinced me was in medical research where IT advances are accelerating randomised testing enormously);
  • the pervasiveness of change has continued to increase rapidly - something that you in Environment are particularly aware of.
• There are, however, important forces that have always affected public administration
  • the basic principles of government intervention in market economies, including public goods, redistribution and social protection, and stability;
  • the accountability relationship between the executive and parliamentary arms of government, and the interface between the political and bureaucratic components of the executive; and
  • continuing management dilemmas such as the balance between generalists and specialists, between vertical and horizontal administration, between due process and achieving results, and between so-called rational management and incrementalism.

Management trends

• The management response to globalisation, including increased competition and increased change, has everywhere emphasised flexibility and agility.
• Coombs proposed a degree of devolution of financial and personnel controls, and a greater emphasis on managing for results
  • this was not pursued far until the 1980's when program budgeting was introduced and a whole range of central controls were progressively devolved;
  • devolution was accompanied by stronger accountability for results and more emphasis on evaluation.
• Competition itself became an increasing theme in public administration
  • devolution involved program managers having the ability to decide between various inputs - for example administrative items and staff;
  • this choice for managers widened progressively as common services such as cars and property were subject first to user charges, then to choice by the user and then to commercialisation of the provider and then to privatisation;
  • commercialisation, market-testing and outsourcing, and privatisation were pursued progressively, particularly during the 1990's;
  • purchaser/provider splits allowed performance benchmarking, and frequently competition amongst providers;
  • accrual accounting ensured that pricing reflected full costs, and allowed a more even playing field.
• The theme of competition, with the increasing use of markets and quasi-markets, has brought an important change to the way public services are managed
  • with greater use of non-government providers;
  • and with public servants increasingly playing the role of purchasers and regulators rather than providers;
  • for the most part, the fundamental role of government has not changed, though there have been interesting developments around the nature of public goods and their management;
    • in some areas (eg toll roads), technology is allowing user pays where previously benefits could not be identified with particular individuals;
    • in other areas (eg spectrum for communications), new fields of property, both public and private, have emerged, leading to new regulatory activities;
  • some of the more interesting developments have been in using markets to help ration environmental resources such as water and water rights.
• Risk management was also a natural development in response to the demand for flexibility to adjust to change.  It has long been critical in the private sector, but is now required right across the public sector and not just in areas such as defence and emergency services.
• The Coombs theme of increased community participation has perhaps been pursued a little differently to the way his Report envisaged
  • the drive for competitiveness has played a stronger role, along with the greater emphasis on managing for results;
  • service charters and associated two-way feedback loops with clients and citizens have increasingly become central to service-delivery management;
  • administrative law reform, which developed in parallel with Coombs, has brought a huge change in the way we do business, requiring far greater transparency, and an accountability overlay that complements our accountability upwards through Ministers and the Parliament;
  • the communications revolution is also requiring the public service to build a level of sophistication unheard of in the past, in market research and media expertise as well as in community consultations techniques.
• And the first theme from Coombs of increased responsiveness to the elected government has also been translated into important management development
  • particularly in the 1980's with a more disciplined financial system that clarified government objectives and priorities (eg ERC, the FE's, program budgeting);
  • and increased resourcing of Ministers;
  • with progressive changes in the tenure of secretaries, and clarification of the authority of Ministers.
• The context of these responsiveness developments is also relevant, with the enormous increase in pressure on Ministers from the media and its more sophisticated technology, with increased public expectations of the political system and government, and with increased competition to influence government including from more skilled lobby groups and advisers.
• This theme also needs to be considered in the light of the ongoing issue I mentioned earlier, of the interface between the political and administrative arms of government
  • it has always been at the heart of public administration theory and controversy;
  • the difference is that the pressures on the interface are more acute now than ever;
  • the democratic responsiveness increasingly required of the public service must be balanced with the requirement for professionalism and impartiality now reinforced strongly by administrative law.

Values

• Let me turn now to the APS Values and their role.
• The demand for greater flexibility and agility has led to a search for a new administrative framework that can give confidence in our public administration without the downsides of prescriptive, central controls.  Accountability for results was a key balancing factor to 'let the managers manage', but was not sufficient for confidence in our processes. 
• Values were seen as a means of maintaining that public confidence in the absence of detailed rules.
• Values are about relationships and behaviours - principles that guide them whatever the prevailing circumstances.
• For us, they are about our relationships with the Government and the Parliament, with the public and in the workplace, and they are about our personal ethical behaviour.
• Yesterday I released two important documents about our Values and Code of Conduct
  • the first, a guide to Agency Heads and APS Employees on the APS Values and Code of Conduct in Practice;
  • the second, a Best Practice Guide to senior management on Embedding the Values.
• Both draw on the grouping of the Values I just mentioned, with a view to making the Values more meaningful and understandable.  That is
  • our relationship with Government and the Parliament
  • our relationship with the public
  • workplace relations;  and
  • personal ethical behaviour
• In many respects, it is these relationships and behaviours that define us as the APS.
• The first publication is a reference document, identifying common and not-so-common situations where judgements need to be made consistent with the Values.  Its purpose is to ensure APS members understand the Values and how best to apply them, trying not to reintroduce rules but to give confidence in the way discretions now available in the Service will be exercised. 
• The second is aimed more at managers including Agency Heads to address the risk that the Values are seen merely as aspirational statements, rather than as legal requirements which Agency Heads and the SES are required to promote.  It draws heavily on international literature, including OECD work, as well as the experience of six APS Agencies.  Embedding the Values is seen as a comprehensive exercise, with three key components
  • commitment
  • management
  • assurance
• The important message here is the "hardwiring" of the Values into Agency systems and procedures.

Leadership

• While no doubt there is an element of 'faddishness' about the current emphasis on leadership, it too is a natural development given the pressure of constant change - what are we looking for from our senior people that can be helpful and relevant notwithstanding change? and notwithstanding the importance of devolved authority and increased external influence and participation? 
• The leadership environment entails less emphasis on direction and more on 'nurturing', 'empowering', 'persuading';  less reliance on rules and more reliance on relationships;  less reliance on structures, and more reliance on the here and now, and more on the strategic and organisational issues of the future. 
• The SELCF has now been operating for about four years.  It is a jigsaw based on five capability areas:
  • shaping strategic thinking
  • achieving results
  • cultivating productive working relationships
  • exemplifying personal drive and integrity
  • communicating with influence.
• It has proven to be highly relevant, partly because of the richness of its language.
• We have also, through studying the results of cohorts of people going through our assessment centres, been able to identify where commonly our leaders and potential leaders are weak and strong
  • generally strong on results and personal drive;
  • generally weak on relations and strategic thinking.
• We are now looking to identify the particular qualities relevant at more senior and less senior levels
  • to help develop 'pathways' to senior leadership;
  • and to plan a better and more integrated leadership strategy.
• Critical to doing so is, as with Values, to "hardwire" our approach to limit the risk of a rhetoric-reality gap
  • in particular to recognise the management skills and technical expertise we need at senior levels, in addition to leadership capabilities (eg corporate planning, financial management, project management, risk management) and to reinforce in depth those skills that reflect leadership capabilities, eg communication skills.

Management and leadership linkages

• I found the following two diagrams presented by a New Zealand colleague last year of some interest in thinking about management and leadership trends.

 

Objectives Based Management & TQM	> BPR	> Value Based Management
Position descriptions & RESULTS were king, however	Competencies shifted the focus to HOW results were delivered .	CAPABILITY in its broadest sense .
Inadequate definition of HOW the job was to be done	Generic v customised - jobs and cultures are not the same either within or between organisations	Values and Standards - enforcement through behaviour change is not easy
Emphasis on delivery of results based on "hard" measures	Predicative validity - in changing operating environments	Emotional Intelligence and cognitive capabilities - still needs to be translated into practical applications
Job design was close aligned to the job evaluation - capabilities were secondary	Embedded in recruitment, development and performance management	Personal style and insight - how do you assess this?

1960 ‘s – 70’s	1980’s – 90’s	2000 +
Focus on the Job Specifications (via results)	Focus on the behaviours (via competencies)	Focus on the ‘whole person’ (via values, experiences, behaviours, attitudes and job pathways)
Achievement of results – EXPERIENCE FILTER	Achievement of results – SKILL FILTER	Sustainable outcomes – INTELLIGENCE FILTER
Selection: “Your have been there“	Selection: “Can you do it?”	Selection: “Can you change, yourself, others and sustain performance?”
Development: “Earn your stripes” – vertical career path	Development:: “Open to stretch?”	Development: “stretch and adapt?”
Performance: Objectives, results and the administration of resources	Performance: Outputs and managing resources	Performance: Outcomes/statements of intent leading and envisioning

 

• The first suggests the management response to more rapid change has been
  • first the managerial agenda of the 1980's to focus on results;
  • then the move to BPR, as more emphasis needed to be given to how we achieve those results;
  • and most recently to VBM as we focus on the capability to continue to achieve results into the future.
• The second suggests that ideas of leadership and what we need in senior positions have gone through a parallel evolution
  • focusing first on definitions of the job, and the person's relevant experience;
  • then on the competencies or skills required to do the job;
  • and now on the 'whole person', including their "emotional intelligence".
• What I liked about my colleague's presentation was that he did not present these trends uncritically
  • more as a hypothesis;
  • and he emphasised the importance of continuing to use the proven approaches of the past, as well as the new ones that seem to be relevant.
• Thus he reinforced my messages about "hardwiring"
  • 'values-based management' needs to build upon the management techniques that have proven useful, in achieving results and developing better systems and processes;
  • 'leadership' still requires appropriate experience and management and technical skills.
• My firm view is that the modern public service will not reflect the image of "hollow government", with generalist purchasers relying on outside experts for advice and service provision.  Rather, we will continue to require subject matter expertise perhaps in even more depth, as well as skills in drawing things together
  • Sir John Crawford's adage that the best generalist is someone who has been a specialist, still rings true to me.

Challenges

• Let me finish this morning by running through a few current challenges, that have come through our work for MAC and in our State of the Service Reports.
• Embedding the Values.  I have touched on this.  There is still some way to go to make the Values real, and to ensure they are genuinely reflected in Agency systems and processes.
• Performance Management.  This remains a problem area, notwithstanding the major improvements in recent years.  Underperformance is not being managed well enough, our staff are unhappy about this, yet they are not very confident about how we have gone about reward systems attached to performance management
  • the MAC Report from 2001 remains an excellent guide.
• Workforce Planning.   While we do not face a crisis, we are facing an important changing of the guard.  We need to do more to prepare for it, both encouraging new ways to retain skilled older workers, and ensuring we not only attract but grow and retain smart young people.  Succession management and workforce planning are very much new skills used only sparingly so far
  • again the MAC OR report from late last year is highly relevant.
• Whole-of-Government.   Roger is leading MAC work on this.  This is another of those issues that have always been with us : balancing horizontal  and vertical management
  • It has probably grown in significance with increased community expectations and the new capacity of technology.
  • For example, Centrelink was foreshadowed in Coombs' "One-Stop-Shop" ideas, but had to await the necessary technology.
  • But it also reflects the limits of the pendulum shift to devolution over the last two decades.
  • We should not pretend we can manage everything together constantly - it is a question of balance, and using appropriate tools such as project management (as against program management) when pursuing joined-up-government.
  • And it is about getting the culture right, by encouraging greater interaction amongst public servants, across jurisdictions, and with external players.

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