The CEO and the board designed a new vision and corporate directions for Centrelink and, as discussed in Chapter 2, endorsed three evolutionary stages for the agency to become a viable one-stop shop for government services (Vardon 1998d).

The first stage was to establish the organisation during 1997–98, concentrating on implementing transitional processes to integrate staff and business activities. The major challenges of this phase were cultural change and improving customer service. Comprehensive surveys of customer and staff satisfaction were conducted and the results used to facilitate program changes.

The second stage was to consolidate initial developments and achievements and to build better service delivery while introducing new service concepts. The aims were to create a seamless service for customers, re-engineer workflows and processes, introduce technological improvements to facilitate customer self-service and staff assistance and to improve services to rural and remote areas. The organisation also had to retain its current business as well as expanding its alliances.

This stage sought to introduce a ‘one main contact model’ with case-management processes to reduce effort and eliminate duplication for customers. There were significant technological challenges associated with this stage in preparing for even more ambitious change in the next stage. A strategic IT plan for business architecture and processes was needed to accommodate the construction and testing of extensive decision support systems (‘expert systems’) while allowing for the potential disruption of the ‘Y2K’ problem (Vardon 1998d).

The third stage aimed to ‘transform the delivery of government services’ (Vardon 1998d:8) with a new service delivery model based on a life-events methodology, the acquisition of major new business, consolidation of staff development programs, more advanced electronic service delivery and closer connections with state and territory one-stop shops.

Centrelink’s strategic positioning for the future was predicated on winning competitive advantage over potential rivals in the government and market sectors by first acknowledging the inevitability of a contestable environment. Its strategies aimed to consolidate its performance by forming strategic alliances with other service organisations and particularly with community groups. With its substantial customer database, it identified its niche as the community broker for all government agencies and their networks, which was seen as a logical extension of the one-stop shop concept in an electronic knowledge and service society. It constantly considered better ways of marketing its products, improving internal skills and competencies and providing better service and choice. At the same time, it had to satisfy its clients as their service provider. It is interesting to compare the changes in the basic tenets of the organisation’s strategic framework from 1997 until the first CEO departed. The changes reflect pragmatism in embedding organisational competencies to improve the probability of surviving as an entity as well as preparing the ground for more ambitious ventures away from Centrelink’s (traditional) core business.

The establishment of the new agency brought together about 20 000 ex-DSS staff and 3000 ex-DEETYA staff, consolidating two regional networks and developing service purchasing agreements with the client departments while maintaining existing government services to a large customer base. Faced with a myriad consolidation, transitional and reform issues, Vardon (1998a:1) decided that the

The organisation had to divorce itself from the DSS and absorb CES staff within its new structure. Its leaders had to start operating in a more businesslike manner and hence convince supervisors, staff and unions to accept different organisational directions, attitudes and structures. The agency faced problems of setting up new operating frameworks, rules and understandings with client departments and the government, while simultaneously maintaining existing systems and the flow of payments to customers. Throughout this transition process, Centrelink also had to face the threat of contestability and potential ‘cherry picking’ by the private sector of attractive organisational functions.

How was a large and complex organisation to approach a model of integrative leadership? The main internal mechanism chosen was that of the guiding coalition, a group of senior managers advocated by Kotter (1996) as one of Vardon’s precepts for successful change, as outlined earlier in the chapter.

While executive teams supporting the CEO were part of normal internal governance practice in the APS, the introduction of the Centrelink guiding coalition was unique to public agencies at that time. The guiding coalition was a top team that had to address a number of initiatives concurrently, such as formulating strategy, managing performance and stakeholder expectations and renewing talent pools. This executive gathering was expected to welcome external challenges and set high performance and effectiveness standards for themselves. Finally, the group was to work to improve the organisation by instituting short-term cycles of action and reflection by accelerating the pace of change and applying their combined business experience and judgment to problems as a team.

Another symbol was the reduction of hierarchies within the organisation and the use of new cultural language, such as the collective phrase ‘the guiding coalition’ to identify all the members of the SES. Flattened structures and teams headed by an SES officer replaced traditional divisions and branches.

Vardon considered that the guiding coalition concept would be valuable for Centrelink because it would allow senior managers to discuss strategies and monitor progress while evaluating performance trends against expected internal and external outcomes. She had already tested a variation of this arrangement: ‘Every place I’ve been, I made a co-linking of the senior executives.’ In this case, she resolved that

The CEO formed the guiding coalition to create a sense of shared ownership and governance of the organisation, to increase the leadership capacity and create a force to sustain and drive change; to process more information more quickly and speed up the implementation of initiatives; and as a vehicle to eradicate the ‘destructive competition between respective patches’ (Vardon 1998c:1, 2). The aim was for the coalition to be a form of matrix consultative management that consulted horizontally and vertically and that sought to unlock the ‘old command and control style’ (Divett 2002:56) and replace the functionally based hierarchy of committees dominated by senior executives and divisional heads of Centrelink’s predecessors. As a strategic management group, the guiding coalition comprised all SES officers and the executive, and included national and area managers. It merged the business and functional levels of the agency and was at the peak of the executive committee structure, as indicated in Figure 4.1.

It was also intended to reinforce the shared vision and accountability of its managers and the vision of the agency. Vardon saw the body as communicating the corporate vision as well as generating short-term wins from a myriad improvement projects and ‘anchor[ing] new approaches and behaviours in the organisational culture’ (Vardon 1998c:3). Within the parameters set by the board of management, the guiding coalition took on setting the direction and taking key decisions, while establishing a culture for the future and acting as an educative forum (Centrelink 1999a:85).

The management group met about every six weeks for two days to manage the agency’s internal governance and strategic agenda and to discuss business-level issues. The meetings provided a forum for operational feedback from area staff on the implementation and management of programs, and allowed national support officers to report on forthcoming events and the status of development projects. The wide-ranging and forthright discussions involved a sharing of responsibility and ownership based on achieving the strategic goals of the organisation. Everyone was expected to participate. These occasions represented a group dynamic that reinforced the leadership ethic of the agency’s SES while updating its knowledge.

In an early evaluation of the guiding coalition concept, Vardon (1998a) asked members what they thought of the operation of the idea and its functional performance. The responses were mixed in terms of its role, the role of the CEO, the coalition’s relationship with the board and the efficiency of such a large decision-making body; the group began with 55 staff (Divett 2002) and expanded in time to about 80, then to almost 100. Some members thought that the issues being discussed were not significant and that participants were either unprepared to contribute or reticent in this type of forum. Others valued the inclusiveness and the building of a corporate sense of network that forced senior officers to come to grips with strategic and operational issues.

Vardon credited the guiding coalition with setting key agendas for reforming the organisation as well as fostering a shared understanding of its new roles and responsibilities. She saw the team as a significant factor in building Centrelink’s success and was heartened by healthy changes in the coalition itself, such as a greater maturity of members, manifested in part by the fact that people were starting to disagree (Vardon 1998c). In her view, critical disagreement contributed to strategic decision making in the organisation, but also strengthened group collegiality. Divett (2002) observed: ‘It took us nine months to turn this big and geographically dispersed group into an effective team, but payoffs have been substantial. We’re creating an entirely new organisation.’

The process of development of this innovative structure paid off in the formative years of Centrelink. By 2003, the annual report noted that this body was responsible for guiding the organisation, setting direction and leading change, establishing a culture for the future, providing an educative forum and communicating decisions (Centrelink 2004a).

Vardon had outlined the scope of change in a welcome and orientation package for staff in April 1997 (CSDA 1997b). In it, she presented the reasons for establishing the agency, its responsibilities, how it would be formed and the number of changes already under way. She characterised the nature of the agency’s business as assessment services, information giving, referral services and payments. The document also identified the four main customer groups or stakeholders as the DSS portfolio minister, client departments, internal customers (the board of management and agency staff) and ‘people who use our services and their representatives’ (CSDA 1997b).

Vardon adopted a highly personalised approach in building a new staff culture and bringing together staff from the DSS and DEETYA. She was acutely aware of past tensions and competition in the DSS–DEETYA relationship as a result of following different and at times conflicting procedures and processes. She saw the new agency as providing an ‘opportunity to combine our services into one organisation without barriers for us as staff in attending to customer needs and without the frustration our customers feel when dealing with two separate agencies’ (CSDA 1997b:18).

Vardon stressed the necessity for transformational and transactional change through a continuous stream of messages to staff, but she also recognised individual reactions that could accompany these seminal changes. She acknowledged a range of likely emotional responses including feelings of loss, resistance to change, denial, uncertainty, resentment, frustration, indifference, caution or indeed increased energy for those who would embrace change wholeheartedly (CSDA 1997b:18–19). Staff counsellors were made available to support staff during the changeover. These communications to staff were highly optimistic and positive in tone but they also dispensed practical ideas in trying to assuage understandable staff concerns. Those staff members who were unable to accept the new workplace culture were invited to ‘reassess their career goals’ and to consider possible moves either within or outside the agency.

During the initial period, Vardon visited most offices in the network to explain the new roles and responsibilities of Centrelink and to answer questions from sometimes anxious staff. Her previous experience in introducing change and her confident manner, combined with her formidable communication skills, provided an obvious focal identity for staff and facilitated her task.

Creating a customer-focused organisation required more than keeping the customers happy. It raised significant concerns for staff about issues of job security and the prospect of their functions being opened up to competitive tendering, compounded by the initial difficulties of bringing together a large number of staff from two different organisations. Because of the tight financial constraints imposed by the additional efficiency dividends, the question of cost cutting through staff reductions was high on the list of priorities; indeed, it provided the major driver for long-term strategy formulation for Centrelink’s future. Most of the initial savings could be obtained only through voluntary redundancies. Because of the historically confrontational approach between the DSS and the Community and Public Service Union (CPSU), the relevant APS union, a new staff employment agreement—seen as an essential for reinforcing the management of change—needed to be negotiated carefully and quickly to ensure that remaining staff were coopted into the new organisation with assurances of continuing status as public servants and promises of productivity-linked staff pay rises.

A Centrelink Development Agreement (CDA) was drawn up during the organisation’s first year of operation to improve the working environment. Centrelink staff members were consulted in developing the agency’s vision and culture and given incentives and opportunities to achieve the requirements of the Customer Service Charter and the BPAs. In 1999, a revised CDA paid particular attention to the job classification structure and introduced a broad banding of classifications. This effectively provided staff in the frontline service centres with pay rises matched to improved work skills and productivity. The aim was to encourage staff commitment and development and to reward improved performance based on service rather than a more generic public service administrative function. Vardon played a central role in first smoothing and then reforming previously acrimonious relations between the CPSU and Centrelink management.

An early challenge for senior management was to develop a new Centrelink culture that reflected those elements of the previous departments that managers wanted preserved and to develop values deemed important for the emerging organisation. A number of shared behaviours were identified and defined through five shared values: listening to customers and the community, mutual respect for customers and each other, behaving ethically and with integrity, addressing innovative ways to provide the right outcome, and problem solving and developing opportunities (Centrelink 1997:8–10, 2003c).^[4]

The first value was listening, because Centrelink wanted to share and apply a culture of listening throughout the organisation, drawing on the strength of CES staff, who were regarded as listeners because they gathered information about customer skills and life experiences. Social security staffers were thought to lack such skills because they were less integral to their work. The second value, respect for customers and colleagues, emerged from studies undertaken by Centrelink on the culture of the organisation in which staff and customers perceived that they were not respected. The third value focused on behaving with integrity and in an ethical manner.

The fourth value centred on exploring innovation, which Vardon (O’Donnell 2004; Interview with Vardon 2002) attributed to a comment by a senior executive from the DSS about the

The final value, solving problems, was selected because DSS front-desk staffers were not regarded as possessing such skills. The DSS staff did not

Vardon regarded the five values as statements about the future, which had been chosen to reflect a distinctive philosophy. The values and associated behaviours became a significant element of the organisational culture that was reflected in staff interaction and external behaviour (O’Donnell 2004). The shared values reflected a special insight into the nature of the organisation and its priorities.

A strategic approach to human resource management was developed over several years. Centrelink had a number of frameworks to address human resource development directly or indirectly, such as the strategic framework, business plan and the National Learning Strategy 1998–2001 (ANAO 2001c:16). Vardon, however, lamented in 2002 the absence of a focused framework:

By 2002, the integration of human resource practices into business planning processes remained limited, according to O’Donnell. A national people manager, appointed early that year, observed that when he arrived

A National People Plan (Centrelink 2002a) was developed in 2002 to improve integration between people management and business. The strategy emphasised six business-improvement focus areas: adding value to business decisions; leaders leading and managers managing; encouraging talent for success; commitment to safety, health and wellbeing; focus on learning, an investment in business; and fostering a culture committed to values, outcomes and innovation. Several major projects for implementing the plan included CDA initiatives, strengthening workforce planning capability and implementing the leadership framework. The National People Plan was fitted into the broader framework of strategic directions and business plans and the balanced scorecard. It was connected also to business-improvement planning processes at the team level and down to personal performance plans.

Centrelink emphasised the importance of organisational leadership and developed a set of normative national elements and associated performance criteria and measures for the leadership qualities it deemed necessary to contribute to the success of the organisation. The list represented a compilation of trait, situational and transactional theories with generalised and specific characteristics. Each quality described its elements with a set of examples of processes: for example, in the leadership quality covering innovation, leaders were expected to demonstrate their innovative abilities when creating a vision, solving problems or planning and facilitating major change. Performance criteria then described further activities that provided a checklist for leadership. Finally, each quality had performance measures segmented into leadership groups at various organisational levels—for example, the National Support Office, area support offices and CSCs.^[5]

Vardon sought to foster these qualities in applying herself to transforming Centrelink and its leaders into a very different government agency. Her impressions of the impact of leadership on change were that: ‘We have learned that we need dynamic and cohesive leadership…an executive who acts as advocates [sic] for collaboration and organisational change, shaping organisational structures and processes and promoting the concept of one business’ (Vardon 2001:10).

The competing demands of manager/leader were difficult to reconcile but the organisation had at least attempted to outline a leadership philosophy that was being matched to the demands of current and future performance-related officers. Mentoring leaders involved nurturing self-confidence by allowing staff to try to succeed at new things, and valuing employees.

The overall reason for establishing a virtual training college was that the elements of the new entity existed but needed to be pulled together, according to the CEO (Hamilton 2007:103). Centrelink had inherited a tradition of staff training from the DSS, but this new stage reflected Vardon’s ‘vision for an organisational learning culture’ (Hamilton 2007:111). The virtual college was to support the steering of Centrelink ‘towards a learning culture’.^[6] According to Vardon:

The Centrelink Virtual College was established in 2001 to provide a facility for staff to acquire accreditation for the training they were undertaking. With the introduction of the college, many of the two-day courses that were previously offered to staff were replaced by accredited qualifications (Centrelink 2002a:19).