The traditional literature on reform and change emphasises unsuccessful initiatives and resistance to change (Halligan and Power 1992). In the reform era, however, the success rate has been notably higher, and there has been a new emphasis on factors that stimulate and support change. These factors include strategic thinking, acting according to core values, customer focus and the development of human resources. Factors determining success in organisational change include the level of acceptance of the need for change, leadership communication, support from senior management and politicians, institutionalisation and alignment of management systems (Rainey and Fernandez 2004:36).
The scope of change ranges from a more limited focus on innovative practices to transformative or fundamental change. Is it in fact possible to produce transformation in organisational change in large public sector organisations and, if so, what is the result? According to McNulty and Ferlie (2003), the discussion of organisational transformation is vague because of the lack of empirical evidence to assess the impact of these planned transformations in the long term. The question of whether to view Centrelink as a transformative case derives in part from its own depiction of its development. After the set-up stages, Centrelink anticipated change at the level of transformation, particularly with the delivery of government services (Vardon 1998d, 1999b).
Vardon’s conception of transformation was informed by Kotter’s (1995) examination of why it failed and this influenced her thinking about organisational change. There was also a broader dimension that located Centrelink within international pressures on organisations delivering public services facing transformational change, which reflected thinking about the future ‘transformation of the business landscape’ (Vardon 1998a). The drivers of change were globalisation, consumer power and technology. The conclusion was that ‘the public sector cannot escape the impact of such transformational change’ particularly through the interface with customers: ‘Centrelink’s communication with our customers will be the first and most visible area of transformational change [of] the ways of doing business’ (Vardon 1998a:1–3).
Two stages of transformation emerged: the original transition from the departments (Social Security and Employment, Education, Training and Youth Affairs) that focused on branding, customer service and cultural change; and the re-engineering of service delivery and entrepreneurship to create a new organisation.
Successful change requires leadership and its significance in organisational change and public agency performance is reaffirmed by a number of studies (Rainey 2003; Nutt 2004). In reports on large-scale public sector change—the cases of the US Air Force, Internal Revenue Service and the Social Security Administration—leaders played crucial roles in the change processes (Barzelay and Campbell 2003; Rainey and Fernandez 2004; Thompson and Rainey 2004).
A number of propositions about leadership are well understood. During the life cycle of an organisation, or at different stages of development or for specific processes, different types of leadership can be appropriate (Stace and Dunphy 2001). There is evidence to indicate the need to think beyond individual leadership to concepts such as the ‘mutualist’ (Nutt 2004), who draws on broader patterns of support, or the model of integrative leadership as a more comprehensive means of viewing these processes (Moynihan and Ingraham 2004). Transformational change also requires the attributes of transformational leadership involving interaction with the external environment and building management capacity through internal management systems.
Effective leadership is shown ‘through actions that build and improve organisational abilities and…governmental capacity, represented by management systems’ (Moynihan and Ingraham 2004:429). In the well-known distinction between management (planning, budgeting, organising, staffing, and so on) and leadership (establishing direction, aligning people, motivating, and so on), there is, however, advice about the need to fulfil multiple leadership roles. Successful transformation is argued to be mostly about leadership and secondarily about management (Kotter 1996:25–6).
In the case of Centrelink, the CEO was the pivot, with the governance oversight mechanisms of the board (including the chair) and the minister playing roles; but how was a large and complex organisation to approach a model of integrative leadership? Distinctive roles also needed to be adopted by the CEO and complemented by the different roles of members of the most senior management group (covering responsibilities for the key management functions).
Building management capacity is a core element based on internal management systems such as finance, human resources and IT. These provide the levers for leaders to produce the organisational capacity that drives and improves service delivery. For Centrelink, the focus was on the importance of strategic direction and planning in supporting the objectives of the organisation. Policy management and implementation were carefully crafted for service delivery. The development of human resource management and an organisational culture over time was important. Performance improvement was to be achieved through focusing the management capacity to achieve service delivery results and to be facilitated through using the balanced scorecard for oversight of performance.
Articulating strategy and seeking internal alignments are important precepts for action (Spicer et al. 1996; Stace and Dunphy 2001). A crucial factor in successful change is ‘the implementation of a set of mutually reinforcing changes’ (Rainey and Fernandez 2004:36; Moynihan and Ingraham 2004). The connection between these elements can be handled through a standard management approach, starting with strategy and looking for conformity from management systems and organisational fit with the environment. For Centrelink, certain leverage points were significant for moving the agenda on, such as the relationships between strategy, delivery models, performance and human resource planning and implementation.