This Annual Report emphasises the State Services Commission's (SSC's) role in leading change in New Zealand's State sector system. This section discusses the overall context of system change: objectives of reform, changes made to date, and level of impetus for further change.
We know that New Zealand's State Services have enormous strengths. The high integrity of our system is internationally recognised and envied, and reports on agencies, from Performance Improvement Framework (PIF) reviews, time and again demonstrate agencies' capacity for high quality responsiveness to the needs of Ministers and governments.
We also know about areas where the system needs to improve. This includes building the capability of the system to meet new challenges. The expectations of communities and governments are changing and rising. Meeting these within available resources is a major challenge and one that requires us to innovate and work more flexibly across agencies.
Three years ago we set out to address this issue in a more robust way than had ever been attempted before. The ten Better Public Services Results are the most visible aspect of a broad programme of reform that is changing the way the State sector system and its component organisations work. The ten Results are important for two reasons. First, they focus on matters of serious concern to New Zealanders and aim to bring about improvements in areas including the safety and wellbeing of children, crime reduction, educational achievement, and the accessibility of government services by New Zealand citizens and businesses. Second, they are designed to exemplify and model a way of working which, over time, will become prevalent across New Zealand's State Services.
The Results approach brings with it an increased focus on outcomes and on the difference we aim to make for New Zealanders. Consequently, the results approach brings into question our existing ways of working; it forces us to ask “Are we using scarce resources in the best way we can to achieve the outcome for customers?” Often, better results for New Zealanders will not be achieved by single agencies working in isolation from others. Consequently the Results have driven the development of new ways of working, through inter-agency collaboration. The Results approach also promotes transparency through measurement of progress. Targets for each result are set and progress is quantifiable and measurable. Progress reports are published on a six monthly basis.
The year in review has seen continued progress towards targets across the ten Results. However, perhaps more significantly, the year has also seen the implementation of broader changes that will facilitate and encourage the wider adoption of collaborative approaches to achieving results into the future. In large part, these broader changes result from the progressive uptake of tools and approaches associated with the State sector and Public Finance Reform Bill enacted in 2013. Changes to the Public Finance Act at that time greatly increased the ability to share and flexibly deploy funding between agencies. Over time this will greatly help the system shift its focus from outputs to outcomes, and from an agency-centred to a customer-centric approach.
In the Public Service, 2014/15 saw the first full year of a new approach to chief executive performance management. This has clarified and standardised chief executive performance expectations and has introduced new system stewardship obligations. These require chief executives to contribute to the collective leadership of the State Services and deliver results over the medium term. Their remuneration is linked to achieving very good performance against these goals.
Implementation of these broader changes has put us in a good position to assist Ministers to keep the Results approach relevant and steadily increasing in its application across the system.
Less visible than the Results, but vital for building momentum on system-level change, has been the progress made over the year on leadership development. The aim here is to develop leaders for the system whose skill and experience enables them to work naturally across agency boundaries, and in terms of sector and system priorities, as well as agency needs. One consequence of developing leaders in this way is that they can be more flexibly deployed between agencies according to operational needs. Leadership development was identified as a key priority in the 2013 report of the Better Public Services Advisory Committee.
In July 2014, chief executives as a group formally signed up to the Leadership Strategy for the State Services. They agreed to take collective responsibility for developing leaders as a system asset. The initiatives coming out of the Strategy are described in detail later in this Report. The overall impact, and one that is already being felt, is to give us a much better understanding of the leadership talent we have across the system, of the potential successors for a wide range of key leadership roles across the system, along with a disciplined and systematic process for identifying, assessing, and developing actual and potential leadership talent. We are at the point now where we can begin rolling out and using significant new infrastructure for leadership assessment based on the work chief executives have done to reinvigorate the Career Boards and co-produce the new Leadership Success Profile.
The work on leadership development is important in itself but is also very significant in terms of the way of working we have established. It has potential to be applied to other dimensions of workforce capability. One such issue is workforce diversity. It is important for our ability to engage with, and respond to, New Zealand communities that the State Services' workforce at all levels is similar in makeup to the society it serves. The year in review saw no major changes in the ethnic makeup of the Public Service workforce. We can note a continuation of the under-representation of Asian communities in the Public Service. At senior levels there has been a continuation of the gradual increase in the proportion of women, Māori, Pacific and Asian peoples in the Public Service senior leadership cohort. Over time we should use this gradual improvement as a springboard for more concerted action on workforce diversity.
The collective leadership role now taken by the chief executive group is highly significant in embedding the momentum for ongoing system change. Increasingly, the change process will be driven by a broader group of system leaders located throughout the State Services rather than limited to central agencies. This model of ‘distributed leadership' has already been evident in the role sector leaders have played in facilitating the joint operations of clusters of agencies. It is also very evident in the work of Result leads in providing facilitation and direction setting for each of the ten Results. Over the past year we have seen these leadership roles continue to bed in. We have also enlarged the system leadership group through the appointment of several Heads of Profession. These will act as focal points for the development of key professional groups within the system and will assist chief executives to raise capability in their agencies.
The year in review has also seen consolidation of the other major new system leadership role; functional leadership. These three leadership roles; the Government Chief Information Officer and the functional leads for Procurement and Property are continuing to deliver efficiency gains working with departments and agencies of the State Services. For example, in the ICT area savings of over $57 million have been made through updating IT infrastructure as a common capability. The consolidation of these functional leadership roles will enable them to broaden their focus to encompass a wider range of issues relating to system effectiveness. This may include such things as consideration of how changing the government property ‘footprint' in communities can improve services to citizens, or how improved procurement and contracting capability can help develop the role of non-government providers in public services.
The last part of the year saw the appointment of a new State Services Commission Deputy Commissioner located in Auckland. The position is responsible for the overall leadership of the State Services in our largest city and for building the engagement between the State Services and Auckland. This appointment was a key part of our response to the recommendations of Doug McKay's 2014 review of the effectiveness of central government in Auckland. It is significant that it was one of the existing Public Service chief executives who took up this role for a three year period. It shows the chief executive leadership group, and the system as a whole, becoming increasingly agile in responding to the challenge of meeting the needs of the diverse communities that make up contemporary New Zealand.
Overall it has been a year of positive progress towards the vision of a more outcomes-oriented, customer centred State sector system. There is still much to be done but there is evidence of an increasingly dynamic response. We also know much more about the state of the system. The PIF and other measures of performance such as Benchmark of Administrative Services and Support functions (BASS) and the six-monthly reports on Better Public Services Results, provide government and the public with a far deeper picture of the system than was available previously. Moreover, the strength of the emerging leadership capability across the State sector system means that we are much better equipped to respond to identified issues and to meet future challenges. It is in this context that the SSC contributes to the leadership of system change.
Iain Rennie | State Services Commissioner