Chapter 7: Leadership and management

Abbreviations

A list of the abbreviations used in this report is available in the Glossary

Management

As discussed at the beginning of this chapter, leadership and management skills are both critical to agency performance. Management encompasses a range of practical day-to-day tasks within an agency that are fundamental to an effective organisation including financial, contract, project, risk and people management activities, all of which are important in terms of organisational performance. The quality of an employee’s immediate management can also be an important factor in their level of engagement with the organisation. In addition, employee survey results reported in Chapter 3 suggest that the quality of management can impact directly on an employee’s perception of their productivity.

On average, employees were satisfied with their immediate supervisors, with satisfaction levels being much higher than for senior leaders. Two-thirds of employees were satisfied with the composite ‘Immediate supervisor’ factor. There was some variation across agencies, however, with large agency results ranging from 56% to 80%.¹⁶

Satisfaction with an employee’s immediate supervisor was strongly related to job satisfaction and was also positively related to results on a range of other factors, including the ‘Senior leaders/culture’ and ‘Work group’ factors.

Employees were also generally satisfied with their immediate supervisor’s people management skills. Nearly two-thirds of employees agreed with the statement ‘My immediate supervisor is effective in managing people.’ This result compares favourably with results in other jurisdictions (see Table 7.2).¹⁷

Table 7.2: Level of agreement by employees that immediate supervisor is good at managing people
Jurisdiction	Strongly agree/agree (%)	Neither agree or disagree (%)	Strongly disagree/disagree (%)	Don’t know/does not apply/not sure (%)	Missing
Tasmania	59	17	24
Western Australia	65	10	21	1	3
Victoria	60	18	22
APS	63	19	18
Source: 2006 Employee survey, 2005 Jurisdictional Input, 2006 jurisdictional input from WA

Immediate supervisor attributes

Generally high satisfaction ratings were also apparent in employees’ ratings of a range of immediate supervisor attributes. The employee survey asked respondents to select the five most important attributes they would like to see in an immediate supervisor. Having nominated the attributes they would most like to see in an immediate supervisor, employees were then asked to indicate their level of satisfaction with these attributes in their own immediate supervisor.

Table 7.3 shows that the attributes that employees would most like to see in an immediate supervisor were demonstrates honesty and integrity, respects employees as individuals, works with staff to find solutions to problems, possesses relevant job skills, and stands up for staff .

The majority of employees who nominated these attributes in the top five were satisfied with their immediate supervisors’ demonstrated abilities in respect of these attributes. Of all the attributes demonstrating honesty and integrity and supportings the use of flexible work practices had the highest satisfaction ratings, and providing quality informal feedback had the lowest. However, given that only 29% of employees nominated providing quality informal feedback as a top five attribute, it is difficult to assess whether their views are representative of all employees’ views.

Table 7.3: Attributes employees would like to see in an immediate supervisor, 2005–06
Attribute	Employees that nominated attribute in top five (%)	Employees who nominated attribute as important who were satisfied (%)
Demonstrates honesty and integrity	66	80
Respects employees as individuals	46	76
Works with staff to find solutions to problems	46	69
Possesses relevant job skills	43	71
Stands up for staff	42	62
Sets realistic performance expectations	39	66
Supports staff to achieve an appropriate work/life balance	37	75
Listens carefully and considers the views and opinions of staff	36	62
Provides quality informal feedback	29	55
Open to new ideas and ways of working	27	64
Supports the use of flexible working practices	21	80
Clearly articulates organisational goals	20	65
Provides access to effective learning and development	20	59
Respectful of diverse points of view	10	62
Demonstrates passion to succeed	9	65
Works effectively and sensitively with people from diverse backgrounds	6	71
Source: Employee survey

A summary index was created from the results of this people management question in the employee survey. The index ranges from zero (the employee was very dissatisfied with all of the attributes nominated) to 10 (the employee was very satisfied with all attributes). An index of five translates to an employee being, on average, neither satisfied nor dissatisfied with their nominated factors.

The proportion of employees with an immediate supervisor attribute satisfaction index over five was 77%. This is considerably higher than the 58% of employees with a senior leaders attribute satisfaction index of over five.

Satisfaction with the attributes in their immediate supervisors was higher for men, employees located in the ACT and for the SES. There was some variation between large agencies. ABS stood out as having the highest levels of satisfaction with the attributes in their immediate supervisors.

Employees were mostly satisfied against a number of other questions asked to ascertain their general impressions of their immediate managers. Three-quarters of employees agreed that their managers provide them with the support they need to do their jobs. Seventy-two per cent of employees agreed that their managers ensure fair access to developmental opportunities for employees in their workgroups and almost two-thirds (63%) of employees agreed that their managers would take appropriate action if decision-making processes were found not to be objective. Consistent with the results outlined above, employees located in the ACT and people at higher classification levels were more likely to agree with the above statements about their immediate supervisors. Again, there was also considerable variation between large agencies and again, ABS stood out as having higher levels of agreement with the statements overall.

Employees’ different perceptions about people management were also reflected in the comments providedby some employees (comments are not necessarily representative of all employees).

I could have marked another 6 attributes which I find important.

Supervisors need training.

My current high level of job satisfaction is largely related to the immediate supervisor that I have.

Very important area. Managers should not be promoted to positions who do not demonstrate adequate people management skills.

My immediate supervisor is very much the ‘meat in the sandwich’ between staff and higher management. A higher rating would apply if my immediate supervisor could rely on the above attributes of higher management.

If the above question was to apply to senior management my response would be ‘very dissatisfied on all counts.’

People management in this Department is not done well. The emphasis instead is on office technology and staff qualifications. Management of people seems a secondary consideration.

Current manager has just started receiving coaching and have noticed an improvement in people management skills. Would encourage all managers to be properly trained in: providing feedback, recognising and appreciating differing work styles, providing encouragement and recognition, and time management.

Performance management

An important aspect of people management is managing performance. Performance management is an essential component of a constructive workplace environment and, among other things, is aimed at improving individual and organisational performance, aligning individual work with organisational initiatives, recognising and rewarding good performance, and managing underperformance.

Performance management is a well documented area. Relevant and significant guidance material for APS agencies in this area includes the 2001 MAC report on performance management, the 2004 ANAO report, and material disseminated by the Commission.¹⁸

Systematic approaches to performance management have been in place for some time in the APS. Within the broad framework outlined by the PS Act and the Commissioner’s Directions, agency heads have the flexibility to develop performance management systems that meet the particular needs of their organisation and employees. In 92% of agencies it is mandatory for all employees to have a formal performance agreement (94% in 2005, 87% in 2003).

There are some very positive indications this year that the quality and effectiveness of performance management in the APS is improving.

The employee survey results point to the fact that performance management systems are well embedded in agencies, with most employees (85%) receiving formal performance feedback during the year (85%, the same proportion as in 2005, down slightly from 87% in 2004, but higher than the 79% reported in 2003).

Managers also report high levels of providing feedback. Of the 31% of employees who indicated that they had direct supervisory responsibility for at least one employee in their agency, 87% indicated that they had provided formal feedback in the last 12 months.

The ability of managers to provide effective formal and informal feedback is fundamental to the success of performance management systems. MAC’s 2001 report and more recent research by the Corporate Leadership Council both stress the importance of informed, positive, fair, accurate and detailed feedback as a strong driver of performance.¹⁹

Almost all (87%) of employees who had received feedback, reported that their performance in their most recent performance feedback session was assessed against a formal performance agreement or work plan agreed with their supervisor. The use of such agreements is likely to increase the quality of feedback.

According to employees, the feedback that they receive appears to be providing them with necessary assistance/guidance and addressing their learning and development needs. Almost two-thirds of employees who had received formal individual performance feedback in their current agency in the last 12 months agreed that it had provided them with the assistance/guidance they needed. Only 15% disagreed. A similar proportion of relevant employees agreed that their learning and development needs were adequately considered as part of the performance feedback session, and only 16% disagreed. Results were less strong on whether their most recent performance review would help them improve their performance (48% agreed, 30% neither agreed nor disagreed and 22% disagreed).

Levels of agreement with the above statements varied considerably between large agencies. However, Medicare Australia, new to the APS this year, stands out as having the most positive results.

This high level of feedback, and employees’ generally positive perceptions of the feedback may be one factor driving the high results for employees’ understanding of their role, discussed in detail in Chapter 3. The ‘Understanding current role’ factor had the highest levels of agreement of any employee engagement factor at 84%.²⁰

Also encouraging is the greater attention to values and behaviour in performance assessments. As reported in Chapter 4, 80% of employees who received feedback reported that some discussion had taken place on behaviour in their performance assessment.

There has also been some improvement in employees’ perceptions of performance pay.

A majority of employees (60%) reported that under the performance assessment system in their agency, any part of their pay was linked to an assessment of their performance (down from 69% in 2004 and 65% in 2005). The most common approaches reported were being eligible for advancement through the salary range for your classification, subject to fully competent performance (65%, down from 77% in 2003) and eligibility for a one-off performance bonus depending on performance (25%).

Other options, which were less common, included:

eligibility for accelerated advancement through the salary range for the employee’s classification, subject to better than fully competent performance (16%—down from 26% in 2003)
eligibility for an increase in base salary (18%)
if covered by an AWA, performance assessments are formally taken into account when renegotiating AWAs (8%)
performance assessment is formally taken into account in selection for promotion (7%).

Performance pay in this chapter is used broadly to refer to all of these methods of linking pay to employees’ performance assessment.

Employee opinions about the operation of their employee pay systems are reported in Figure 7.5.

Across the board this year, relevant employees were more positive about the operation of their agencies’ performance pay systems. Some positive results are now emerging, with agreement with all statements being higher than they were in 2003, except that performance pay provides appropriate rewards for top performers (likely to be scheme related).

The majority of relevant employees now agree that the performance pay system in their agency ensures performance assessment is managed systematically and regularly (54%). Fifty per cent of employees also agree that the system in their agency operates fairly and consistently (up from 39% in 2005 and 47% in 2004).

At the other end of the spectrum, although agreement levels have improved this year, relevant employees continue to be more likely to disagree than agree that the systems in their agencies reflect differences in individuals’ performance (45% disagreed compared to 24% agreed), provides appropriate rewards for top performers (51% compared to 24%), accurately reflects differences in individuals’ performance (45% compared to 24%) and contributes to a workplace culture where individuals work together effectively (33% compared to 28%).

Figure 7.5: Proportion of relevant employees agreeing with performance pay statements, 2002–03 to 2005–06

Source: Employee surveys

There continued to be considerable variation in opinions about performance pay across large agencies. The largest difference in range was in the level of agreement on whether performance pay systems operate fairly and consistently, from a low of 24% to a high of 66%. However, there was a broad range of results for most statements, including:

acts as an incentive to perform well (26%–63%)
ensures performance system is managed systematically and regularly (38%–68%)
contributes to a workplace culture which upholds the APS Values (23%–55%)
provides appropriate rewards for top performers (14%–45%)
contributes to a workplace culture where individuals work together effectively (12%–49%).

The smallest range was for accurately reflects differences in individuals’ performance (12%–38%). The breadth of the range for all statements shows that there is scope for further improvement.

Medicare Australia stood out as a good performer, being significantly above the APS average against all but one of the statements.

Levels of agreement varied considerably on some of the statements according to sex, classification, age and location. Women and younger employees tended to be more positive about aspects of performance pay systems. With one exception (i.e. provides appropriate rewards for top performers), employees in the EL classifications were most negative.

Overall, the improvement in this year’s results, taken in the context of the other positive results on performance management, suggest that there may have been some improvements to some agencies’ systems or a gradual change in culture in some agencies. Some support for the hypothesis that the culture in the APS is changing slowly is provided by looking at levels of agreement about the operation of performance pay systems by length of service. Employees with longer service, who have experienced different approaches to performance pay in the past and/or commenced in the APS prior to the introduction of performance pay, tend to have greater levels of dissatisfaction with performance pay systems. Conversely, employees with 1–5 years of service are more likely to agree against most factors, although the only statements with which the majority of this group agrees are that the performance pay system operates fairly and consistently (53%) and ensures performance assessment is managed systematically and regularly (58%).²¹

In contrast to the general improvements in views about performance management in agencies, employees remain concerned about the handling of underperformance in their agencies.

Almost all of the managers who provided feedback (92%) indicated that they either always, or usually, confront and deal with performance management issues as they arise. However, this contrasts rather starkly with employee perceptions. Only 42% of employees agreed that their manager deals appropriately with employees who perform poorly. Even fewer (25%) agreed that their agency dealt with underperformance effectively. This disparity between supervisors’ and employees’ views might be partly explained by the fact that employees are not in a position to know exactly how underperformance is being dealt with. Nevertheless, there appears to be room for improvement in this area.

Managing performance is a difficult task. With this in mind, the Commission has developed a guide, Sharpening the Focus: Managing Performance in the APS to assist agencies to improve their performance management approaches and systems.²² The guide suggests a three-level approach for reviewing, refining and implementing performance management systems to ensure they achieve desired outcomes, are supported by employees, and are effective in managing various aspects of performance.

The key considerations identified are workplace culture, the system and its credibility, and supporting practices. The effectiveness of the whole system relies upon the successful integration of the three levels.

Full details of the factor analysis, including details of the methodology and questions used, are set out in Appendix 4.
The jurisdictional comparison data from surveys conducted in 2004–05 and 2005–06 was provided to the Commission by the State Services Authority, Victoria (People Matter Survey 2005); the Office of the State Service Commissioner, Tasmania (State Service Employee Survey 2005); and the Office of the Public Sector Standards Commissioner, Western Australia (Climate Survey 2005–06). While the Victorian and Tasmanian surveys covered the jurisdiction, the Victorian jurisdictional comparison data was based on web-based responses only. The Western Australian Climate Survey involved 14 agencies—each year 10–15 agencies are surveyed with each agency being surveyed approximately once every 5 years.
Management Advisory Committee 2001, Performance Management in the Australian Public Service—A Strategic Framework, Commonwealth of Australia, Canberra; ANAO 2004, Performance Management in the Australian Public Service, Performance Audit Report No. 6, <http:// www.anao.gov.au>; Australian Public Service Commission 2006, Sharpening the Focus—Managing Performance in the APS, <http://www. apsc.gov.au>
Management Advisory Committee 2001, Performance Management in the Australian Public Service—A Strategic Framework, Commonwealth of Australia, Canberra; Corporate Leadership Council (CLC), Building the High Performance Workforce—A Quantitative Analysis of the Effectiveness of Performance Management Strategies, Corporate Executive Board, Washington, DC. These findings result from research undertaken by the CLC, via a web-based survey of 41,000 employees and managers, and of their performance management database, aimed at identifying the major drivers of individual performance <http://corporateleadershipcouncil.com>
Full details of the factor analysis, including details of the methodology and questions used, are set out in Appendix 4.
Those with less than one year’s service were excluded on the basis that they would not have gone through a full annual performance management cycle. Forty-nine per cent of employees with 1–5 years service agreed that their performance management system acts as an incentive to perform well.
Australian Public Service Commission 2006, Sharpening the Focus: Managing Performance in the APS, <http://www.apsc.gov.au>

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