6. It’s lonely at the top: management of the agency

I always put great store in strategic planning, consciously trying to avoid the dangers of rhetorical and meaningless vision and mission statements by processes of extensive consultation and engagement supported by real evidence and analysis. Good plans require frank discussion of strengths and weaknesses and of the changing environment. I recall, for example, that the most critical issue in 1994 for the new Department of Housing and Regional Development was acknowledgment that the Whitlam Government’s Department of Urban and Regional Development (DURD) was widely seen to have been a failure, and we needed to understand the reasons and how we could avoid the mistakes made by DURD.

I would substantially revisit plans after elections or after changes of portfolio minister, with annual reviews of the plans in between. The plans represented an agreement between the minister and me as to how we planned to deliver what the minister and the government required (as set out in portfolio budget statements and Prime Minister’s charter letters, for example). They typically outlined strategies covering structures, systems, staffing, communications and external relationships, all linked to a small number of unifying themes reflecting the government’s broad policies.

The plans were not one-off exercises that simply ended up on the shelf, but were reflected in the business plans across the department and in performance agreements, and were reported against including in the annual reports of the department.

The strategic plans were also complemented by more detailed plans on particular critical strategies such as staffing, communications, IT and financial management. We also undertook risk assessments and developed risk-management plans, though these were not as sophisticated as is now common practice in Australian government departments.

Under the Public Service Act and the Financial Management and Accountability Act, the secretary has direct responsibility for the management of the department. Staff are accountable to the secretary. Management committees were formally only advisory, but I always placed considerable emphasis on them, particularly in larger departments. They help with the management workload, ensure wider ownership of decisions and foster a shared commitment to strategic directions.

The Health Department Executive team in 2002 – Andrew Podger (seated) with David Borthwick, Mary Murnane and Professor Richard Smallwood (photo by kind permission of the Department of Health and Ageing)

I reviewed the Chief Executive Instructions which underpin the high level management structure every few years, not only clarifying financial rules, delegations and so on for departmental staff (as required by the Financial Management and Accountability Act), but ensuring they reflected the APS Values and Code of Conduct and promoted the culture we wished to foster in the department.

The composition of the executive team is critical to making the top structure work. I always looked to a balance of expertise and personal styles. Subject-matter expertise is essential within the executive to ensure credibility with stakeholders, not least the minister. The team must also include strong management skills. Having at least one person with central agency experience also helps. Corporate knowledge and some continuity are also important, particularly in large departments, and I generally chose not to displace incumbents too quickly (if at all). As explained in Chapter 10, I felt it was also important for the service to have a least one deputy who was a strong candidate to be a future secretary.

As a rule, division heads were responsible for big programs and exercised very substantial delegations, and they had broad management responsibility regarding staffing and administrative resources. The management structure above them was intended to ensure cohesion rather than to interfere. Division heads generally reported to deputies, but I encouraged the deputies to act not as super-division heads but as quasi-secretaries (as mentioned earlier, where there were junior ministers, I allocated prime responsibility for supporting them to a deputy). I always preferred fewer rather than more deputies in organisational structures.

Division heads’ authority for staffing was subject to the budgets they held for administrative purposes and centrally determined pay and classification arrangements. The latter has become an important element of a secretary’s management responsibilities.

While I held each division head responsible for the management of their business units and programs, the departmental management committee also regularly reviewed program performance. In the Health department, we put extra effort into this through the department’s Performance Management Committee. This committee would meet regularly to discuss particular programs, focusing on the performance indicators and targets for each program in the portfolio budget statement and reviewing the management of risks against risk plans. The committee might also suggest more formal evaluations from time to time.

This built a corporate ownership of the programs we were managing, allowing the interactions between programs to be regularly reviewed and some cross-program learning to be applied.

The committee also monitored the implementation of key initiatives including major budget measures. This required a project management approach and I frequently established a formal project team to manage some of the more complex initiatives (such as the reforms to private health insurance). The committee also used Gantt charts to monitor progress of all the key initiatives, ensuring I was kept informed of significant problems and could advise the minister accordingly. This was the beginning of what has since become a more sophisticated whole-of-government approach to improving and monitoring the implementation of government decisions.

I encouraged the use of quantitative measures of program and project performance but was always mindful of their limitations and the need for a broader appreciation of how well a program or project was running.

Making senior appointments is perhaps the most important element of a secretary’s management responsibilities and one that takes considerable time and effort. Selection of SES officers is subject to certification by the Public Service Commissioner, but agency heads take the decisions and run the process. I always chaired selection committees for deputy-level appointments and took close interest in all SES appointments and movements, which were always discussed by the executive. I also monitored appointments and movements at EL2 level, regularly updating information about high flyers and pursuing strategies for their training and development, including through transfers and placements on project teams to broaden their experience.

Having credibility with key stakeholders is also essential to the department’s effectiveness, requiring careful balancing of generalist and specialist skills at even the most senior levels. Seconding Professor Judith Whitworth, a world-renowned medical researcher, as Chief Medical Officer in 1997 literally transformed the Health department’s relationship with the medical profession, complementing our already strong capacity in public health. When she left, I appointed in her place Professor Richard Smallwood, former President of the Royal Australian College of Physicians and Chair of the National Health and Medical Research Council (NHMRC). In the Housing department, having a small number of city planners, a top team of housing policy analysts and a senior officer with a strong industry background ensured credibility with the states and the housing industry.

I put a lot of effort into the performance assessment system in each agency I managed. The broader process of performance management described earlier closely guided individual performance. Individual performance agreements were linked to program (and project) performance as well as to the strategic plan priorities concerning management of staff, building team capabilities, fostering external relationships and upholding values through personal behaviour.

Assessment against these agreements was also subject to a strict quality-assurance system to make performance assessment obligatory and to try to maintain consistency. The system involved regular direct feedback during the year and the provision of draft ratings by supervisors to their supervisors at the end of the year before final decisions were taken. The supervisors’ supervisor would then meet with the supervisors together to gain endorsement that the proposed assessments were consistent.

Despite much criticism, I also used a very broad template to guide the performance-appraisal process, allowing departures from the template where a branch or division had clearly performed exceptionally (or badly). I also experimented with upward appraisal, which worked successfully if not linked to the end-of-year assessment but focused on personal development and improvements in team performance.

Performance appraisal formed just one of the elements aimed at enhancing the organisation’s capability (Table 6.4).

Every two or three years, the department would enter into negotiations for a new enterprise agreement encompassing some pay increase and/or conditions enhancements combined with productivity measures. I generally negotiated directly with staff as well as with unions, preferring the final agreement to be signed off by the staff (rather than just the unions). The process could be time consuming for me as well as for the senior managers most responsible for human resources as I always attempted to link the agreements not only to our budgetary position but to our strategic directions, which sometimes included industrially sensitive measures such as more robust performance management.

In line with the Howard Government’s industrial relations policies, secretaries introduced individual Australian workplace agreements (AWAs) for their SES and most EL staff. Later, there was strong encouragement to widen the use of AWAs to all staff. My approach was to limit AWAs to senior staff only (with a small number of exceptions) and then to use a standard format within which the staff concerned could negotiate personal provisions such as the real pay (within the publicly known bands) and conditions. The standard format was part of an explicit remuneration strategy we developed and circulated, to ensure all staff could be confident of the integrity of our approach and that we were abiding strictly by the APS value of merit-based employment. As secretary, I was always involved directly in negotiations with my most senior staff.

Fostering a productive culture involves more than setting strategic directions and establishing an effective management structure—essential as these are. Leadership and values are important, even if they have become somewhat ‘faddish’ terms. A key instrument I used was a common program of leadership development across all middle and senior managers tied to our particular business (health or housing or administrative services). I inherited the customer-focused training program used so effectively by Noel Tanzer in the Department of Administrative Services in the early 1990s to help turn corporate government services into efficient and effective commercial businesses. I used Peter Senge’s ‘learning organisation’ as the core theme in the departments of Housing and Health, those two organisations relying heavily on research and expertise for ‘evidence-based’ policy and management, and also on external stakeholders with very different cultures to bridge. I was also looking to build a more flexible and agile organisation, better able to manage change and handle uncertainty.

I personally attended at least one session of each of these many courses—Tony Ayers used to call such sessions ‘fireside chats’—to clarify to staff my own views on the organisation’s strategic direction and to demonstrate my commitment to a more open culture that promoted initiative as well as collaboration. These also reinforced my approach towards public service professionalism and offered opportunities for participants to examine my personal style and objectives. (The almost universal question in 1996 and 1997 concerned my tenure in the Health department: I could assure them only that my own desire was to stay for at least five years but that proved a sufficient commitment for most to give their full support for the directions I was pursuing.)

The purpose of the leadership development program, and related activities, was to gain alignment across a large organisation based on genuine commitment and enthusiasm rather than mere compliance. The key to this was to gain the support of the middle managers—those whom most staff considered to be their team leaders and who more senior managers relied on to get things done. I had become increasingly aware over my career of the importance of teamwork, particularly by middle managers, and the role of team leaders in setting the example for their staff. I was fortunate to participate in a series of remarkable teams—the Income Security Review in the Department of the Prime Minister and Cabinet, the Development Division in the Department of Social Security, the Finance department—and learned that their success was only partly due to the calibre of the individual team members. As important, if not more so, was the example set by the team leaders and the environment that allowed them to take the initiative and to accept personal responsibility.

Complementing the leadership development program in the Health department was an ethics awareness program for all staff, which continued for all new staff (see Chapter 10 and Table 10.1).

Another important tool in fostering a productive culture is the celebration of success and showing pride in history. I was pleasantly surprised by the level of interest and support in the Housing department’s celebration of 50 years of the Commonwealth–State Housing Agreements and in the Health department’s celebrations of its eightieth birthday in the centenary year of the Commonwealth. The book we commissioned that year from author Francesca Beddie, ‘Putting Life into Years’: The Commonwealth’s role in Australia’s health since 1901, in which I took very close interest, was widely commended within and beyond the department.

Awards are simultaneously perceived cynically by staff from a distance and hugely appreciated by those getting them and those near to those getting them—as long as the peers believe they are deserved. I put considerable effort into having some awards for successful teams and individuals, recognising the risks if our judgments were astray.

Enhancing and sustaining capability involve each of the elements mentioned previously but also investments in staff recruitment and training, management and IT systems, and external relationships. As outlined in Table 6.4, I called for statements of required skills and knowledge from each area of the department as a key building block for identifying gaps or potential gaps and strategies for filling them via recruitment or staff development, including staff rotations. These statements provided a more balanced perspective on what was required than had previously come from human resource areas on their own and strengthened the professional culture we were aiming to build.

We invested heavily in IT, particularly in the Health department. Our longer-term vision was a nationwide system of electronic health records to support integrated health care, but most of our investments were in systems for internal administration and management of programs. Our success was mixed. I believe health managed better than nearly any other agency the government’s policy on IT outsourcing, employing a carefully designed project management approach that focused on the business requirements of the department and the then Health Insurance Commission. Less successful was the introduction of a new administrative system in 1998, where our ambitions for improved records management and electronic administration of personnel decision making such as leave went beyond our investment in consultation and staff training. I learned the sad lesson that if management gets the basics such as IT support wrong, it loses credibility among staff for everything it does (this was revealed in our first comprehensive staff survey shortly after this IT failure).

Policy advising is part and parcel of supporting the minister (Chapter 3) and occupied a great deal of my time. Management of the policy advising process is, however, a key management task as well. The management structure I generally had in place entailed a central or strategic policy unit and policy capacity within each of the program divisions. The balance was always an issue.

Quality assurance was provided first through the hierarchy, with minutes to the minister required to be signed by SES officers and copied up the line, and deputy secretaries (if not the secretary) always engaged in more substantial policy discussions; the originating author, usually a non-SES expert, was identified as the contact officer. Second, we used cross-departmental processes such as the policy forum and the role of the central policy unit (which, for example, coordinated budget proposals) to ensure wider coordination and to foster internal debate. Failure to consult across affected areas of the department was treated firmly. Policy advising capacity was also enhanced by longer-term analysis, particularly within the central unit, but also through external linkages such as with the Australian Institute of Health and Welfare (AIHW) and the National Health and Medical Research Council (NHMRC) (in the Health portfolio) or the Australian Housing and Urban Research Institute (AHURI) (in the Housing portfolio).