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Report of the Advisory Group on the Review of the Centre

Last updated 28/6/2002Plain text URL: http://www.ssc.govt.nz/roc

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New Directions - The Proposals

46 The picture that emerges is a system that provides a reasonable platform to build on, but one where some significant change is needed. We have identified three priority areas for change:

  • service delivery for cross-cutting services - more integration is needed;
  • tackling fragmentation and improving alignment; and
  • people and culture - stronger culture, a better place to work.

47 The nature of the changes we think are needed is as follows:

Current State

 

New Directions

Service Delivery

impediments to inter-agency initiatives

citizens face multiple entry points to government

poorly developed mechanisms for devolving responsibility

Service Delivery

responsive, adaptive system

more seamless face of government

technologically sophisticated

better connected with Maori, communities

Tackling Fragmentation / Improving Alignment

multiple agencies

plethora of coordination mechanisms

emphasis on specification

ambiguous leadership

Tackling Fragmentation / Improving Alignment

fewer agencies, better connections

more purposeful collaboration

clearer leadership - mandated, flexible

long term relationships the norm

fostering trust

People and Culture

emphasis on individual agencies

passive leadership development

People and Culture

greater sense of the State sector whole

opportunity for collective engagement

more proactive leadership development

strong unifying sense of values

     

48 Moving in these new directions requires action across the board. The proposals that follow represent our view of good places to start. They are not a comprehensive list of things to do, nor are all of them new. A number of initiatives to address these issues are already underway across the state sector, many of them from the last 18 months, including the Partnership for Quality Agreement with the PSA, the work of the State Sector Standards Board, collective work by chief executives, work on social indicators underway in the Ministry of Social Development and other departments, the Pathfinder project on outcomes and the development of Deputy Commissioner Teams in the SSC. A number of significant projects are described in Appendix 8. Our intention is not for the Review of the Centre to cut across other work, but to build on it where appropriate.

Recommendation: We recommend Ministers note the Advisory Group's view that the three areas for attention are:

  • Achieving better integrated, citizen focused, service delivery, particularly where complex social problems are dealt with by multiple agencies, making sure the system is focused on the results that citizens and governments want in terms of outcomes and services;
  • Addressing fragmentation and improving alignment particularly through: a stronger emphasis on outcomes; developing more effective, higher trust means of working together; harnessing technology; re-examining the large number of agencies and votes, and the tendency to emphasise vertical accountabilities rather than whole of government interests; and
  • Enhancing the people and culture of the State sector, particularly building a strong and unifying sense of values, staff and management development, and meaningful opportunities for collective engagement in organisational decisions.

Integrated service delivery

49 A central question for the Advisory Group was whether the State sector is as effective as it should be in providing services to the community. Two sets of issues emerged consistently through the review:

  • The extent of inter-agency cooperation required in the delivery of some services, and the difficulty of achieving coordinated "whole of Government" action; and
  • The extent to which decisions about the service are best made at the point of delivery, in a local context, or in a standardised, frequently pre-specified way.

50 Both these issues have different implications. Neither applies uniformly to all Government serrvices as can be seen in the diagram above. Different approaches are needed to different services. In broad terms the most straightforward services are those in the top left corner of the diagram. These are provided according to a specification that will typically be determined nationally, with minimal need for inter-agency interaction. These sorts of services tend to be standardised and predictable, a desirable characteristic for many services delivered to businesses and citizens (e.g. tax, border control). They represent a significant proportion of Government services, and by international comparison are well supported by the current New Zealand public management system.

51 Moving out of the upper, left corner, services become less well suited to national specification, and more agencies need to be involved. Moving from left to right sees an increase in service discretion, and more need for frontline staff to make case-by-case judgments. Moving from top to bottom more agencies need to be involved and vertical accountabilities need to be tempered with a stronger whole of government perspective.

52 The bottom right hand corner poses some of the hardest challenges. Services here tend to be both cross-cutting and highly devolved. The boundaries between central Government and local Government, Maori and NGOs can become blurred. Staff need to be able to manage diverse relationships and make difficult trade-offs. Front line staff need to be able to access information quickly. Considerable potential for innovation exists, as there are many different, local ways of approaching problems. With these possibilities comes greater risk.

53 To achieve significant change it will be necessary to test new concepts and empower those dealing with citizens to move away from a one-size-fits-all model. These initiatives may cross Ministerial boundaries, and may also move outside traditional reporting structures. Some of these concepts will fail. Changes recommended in this report provide the flexibility to manage the reporting and interagency relationships, but the ability of Ministers to reflect these changes in their responses will be a critical element in the success or failure of initiatives.

54 The focus of the Advisory Group has been on these issues. There are no simple solutions, or single levers that can be pulled. Progress will be made through finding flexible and responsive ways of working that reflect the particular challenges of each situation. There are proposals in this package that will enhance service delivery in all quadrants (eg culture, values and ethos) but the new ways of working, outlined below, will have the biggest impact on services nearer the bottom and right of the diagram. These challenges are illustrated in the case studies in Appendix 6.

New ways of working to improve integrated service delivery

55 Circuit-Breaker teams: We propose the establishment of front-line based, inter-agency teams to find creative ways to solve problems that have proved intractable over time (e.g. the state of rural housing in Northland). These would not be simply more committees - they represent a different approach to problem solving. We already see some examples of this sort of approach, often at local initiative. The teams would also:

  • Create a demonstration effect showing that front-line, cross-boundary creativity can solve problems;
  • Show that the centre is serious about tapping the ideas of the front-line; and
  • Build stronger links between the centre and the front-line.

56 The teams would:

  • Draw on front-line staff from multiple agencies;
  • Be supported by a dedicated unit based in one of the central agencies to provide technical, research and analytical support, including advice on evaluation;
  • Undergo an initial course in problem analysis, creativity and change management;
  • Be given six months to develop, cost and plan a solution to the problem, with a brief to think beyond existing procedures, programmes or rules;
  • Meet periodically with the chief executives of agencies involved, to present their proposals and receive feedback and a go/no-go decision. Some proposals are likely to require Ministerial endorsement.

57 If the teams succeed, later teams could work on other matters (such as a development focus as opposed to a problem focus). However, we want these teams to focus initially on service delivery problems.

58 Mandated regional coordination mechanisms: Ensuring coordinated delivery is hard. Different agencies often have different levels of delegated authority, and different regional boundaries. Typically no agency is mandated to ensure coordination occurs, although in some regions coordination mechanisms have developed. We propose more work to understand the best of current practice, as a prelude to implementing mandated regional coordination mechanisms. This should include looking at the impact of factors such as the Privacy Act and different regional boundaries on coordination.

59 We expect a range of different co-ordination arrangements will emerge. They will need to facilitate more effective inter-agency collaboration and planning, and more effective interaction with local Government, NGOs and Maori, as well as being able to provide a regional perspective on how effectively government is meeting the needs of citizens. An important part of the brief for regional coordination will be to ensure a range of fora for the State sector to interact with Maori.

60 Many problems cannot be solved by a single actor, public, private or community. We have not had enough time for consultation on how to make relationships with local government, the voluntary and community sector, and the private sector and Maori stakeholders, work better, but note the work undertaken by, and subsequent to, the Community and Voluntary Sector Working Party. The review of regional coordination should pay attention to relationships with these groups.

61 Policy/operations connections: Good policy advice and implementation requires good two-way flow between staff and communities at the local level, and policymakers at the centre. The extent to which this currently occurs is variable. We need to improve the links between policy and delivery. Engaging Maori early in the process of policy development and programme design will minimise the risk of service failure. There are good models of development work at a regional level to build on.

62 We should begin with an assessment of how well current policy/operations relationships operate, to identify targeted change. While this may involve structural change, the Advisory Group does not recommend a comprehensive restructuring of the State sector to put all policy and operations into the same organisations.

Recommendation: We recommend that Ministers agree to a series of initiatives to better integrate service delivery including:

  • establishing cross-agency "circuit breaker" teams to solve previously intractable problems in service delivery by drawing on front-line knowledge and creativity together with central technical support;
  • enhancing regional coordination of State sector agencies, including their interaction with local government and community organisations, by adapting and building on existing successful models of local coordination;
  • reviewing relationships between policy and operational units within the State sector, and identifying ways of enhancing the sector's ability to provide well-informed and practical policy advice and to implement policy decisions on the basis of a thorough understanding of them.

Tackling fragmentation and improving alignment

63 Fragmentation occurs partly because there are too many agencies, and partly because there is an inadequate unifying vision and purpose for these agencies, within which each can make its own contribution to the Government's objectives. The proposals to address fragmentation and improve alignment cover priority setting, structural change, networks, Crown entity governance, and accountability arrangements.

Priority setting and accountability systems

64 The State sector works best when it has a clear sense of where it is going, and what has to be done to achieve the desired results. Ministers have an important role in this, both individually and collectively. Senior public servants need to engage with Ministers on what will make the biggest difference - a point made by a number of commentators and chief executives that also came through strongly in the hui with senior Maori.

65 Better priority setting and planning is in part dependent on better information on what it is the Government wants to achieve. We propose a number of changes to the performance management and accountability system to focus attention on outcomes (what are the overall results we are trying to achieve, and how are we going to get there?), and to promote genuine engagement between Ministers and departments by focusing on the things that are really of interest to most Ministers. This should include better information on intermediate level outcome goals. These proposals include:

  • Reducing the number of formal ex ante documents and concentrating on a departmental statement of intent (SOI) that must be tabled in Parliament. This will focus attention on a range of aspects of performance - outcomes (and evaluation), capability and relationships as well as outputs (services). Detailed information on outputs would still be available in an output plan. The SOI would be a product of a process of objective setting and planning by departments that involved active engagement with Ministers and central agencies;
  • The use of networks and judicious structural change to better coordinate policy development and delivery for particular sectors or outcome goals;
  • Enhancing recent developments associated with the budget processes that provide a greater focus on outcomes (notably value for money reviews that focus on effectiveness, and the requirement that new funding include evaluation criteria). Incentives on Ministers and departments to identify efficiency gains, and to actively prioritise projects, will be stronger where budget constraints are clear and where the basis on which any savings will be shared is well understood in advance;
  • Better "State Indicators" - a set of high level measures on a relatively small number of indicators of community well-being should prompt a greater focus on outcomes (Work is already underway on this in the Ministry of Social Development and other agencies.);
  • More effective evaluation;
  • An enhanced process for reviewing agencies, being introduced in the SSC through the Deputy Commissioner teams, that involves active engagement with Ministers and looks at both strategy and performance, including evidence of effectiveness.

Recommendation: We recommend that Ministers agree in principle to changes to the accountability and reporting system to put more emphasis on the achievement of high level objectives and priorities (outcomes), and the capability of government agencies, as well as outputs, by:

i Providing Ministers with a stronger mechanism for shaping departmental priorities through better engagement with departments around a statement of intent;

ii Replacing purchase agreements with output plans;

iii Enhanced monitoring of organisational performance.

More effective evaluation

66 We need better information about actual performance, in both outcome and service delivery terms. A number of initiatives should prompt greater emphasis on evaluation by government agencies, including:

  • The "Pathfinder" project is helping develop and spread the techniques to make outcome focussed management more real in departments;
  • The greater outcomes focus in statements of intent;
  • The more explicit emphasis on evaluation through the budget process;
  • More emphasis on evaluation by central agencies in departmental review processes.

67 We endorse these developments, and believe they need to be reinforced. There is merit in the idea of having a dedicated resource that can provide a broader focus to evaluation effort through:

  • Setting up a whole-of-government steering group involving key evaluators and others with an interest in evaluation;
  • Developing criteria for deciding which outcomes should be evaluated;
  • Liasing with Ministers to ensure sponsorship for these impact evaluations;
  • Deciding on high level evaluation methodology;
  • Advising on or commissioning these evaluations;
  • Determining if anything needs to be done to increase the supply of evaluators.

68 The recently established Social Policy Evaluation and Research Committee (SPEaR) seems a significant step in this direction. The change implementation group should liaise with SPEaR and recommend further action if appropriate.

69 More weight is required than the impact of a new committee, however. Given the importance of evaluation, and the poor performance of the system in this regard, this is an area where we expect that central agencies should retain ongoing leadership, not necessarily in the sense of conducting major evaluations themselves, but in providing encouragement and oversight of evaluation. This should be reflected in the ways in which central agencies:

  • Engage with departments in planning and priority setting;
  • Provide policy advice;
  • Operate in the budget process; and
  • Review agency performance.

Vote structures:

70 Vote structures can affect resource allocation and budget management, as well as policy and service co-ordination. The Public Finance Act requires a separate Vote for each funding relationship between a Minister and a department, to provide clear accountability to Parliament (e.g. one Minister has four separate Biosecurity Votes because four departments are involved).

71 We recommend that an enabling amendment to the Public Finance Act be made to remove the technical barrier to Ministers implementing a Vote structure that may significantly improve resource allocation, without compromising good financial management practice, or Parliament's ability to hold Ministers to account. This would not commit the Government to change the current Vote structure, but would enable Ministers to rationalise and order Votes in a way that is more consistent with the Government's outcome goals (e.g. one Biosecurity Vote rather than four). Treasury should report to Ministers on initial candidates for these arrangements among current votes.

Networks

72 One way to facilitate the development and implementation of joint strategy and collaboration across multiple agencies is for groups of those agencies - both departments and Crown entities - to establish and work within networks. These are cooperative arrangements between separate agencies. Such networks can operate at both the centre and in the regions; and support both policy development and the delivery of joined-up services. Some networks exist now in the State sector, but more effective use could be made of this type of working arrangement.

73 The Advisory Group recommends central agencies work with Ministers and other Chief Executives to identify where formal networks of agencies would add value. Such networks would be:

  • Based around either sectors (e.g. Justice) or outcomes (e.g. economic transformation), and include a core group of the main agencies working in the area;
  • Set up and continued where useful;
  • Endorsed by Ministers;
  • Compulsory - component organisations could not opt out;
  • Not exclusive - agencies could belong to several networks.

74 A chief executive of one of the agencies would lead the network. This network leader would be first among equals with a clear mandate to:

  • Require the provision of information;
  • Call meetings;
  • Report to any of the relevant Ministers;
  • Provide purchase advice to any of the relevant Ministers;
  • Provide input into performance assessment and appointment processes run by the State Services Commissioner;
  • Coordinate the provision of policy advice;
  • Exercise other specific powers conferred by Ministers.

75 Network leaders would not have the right to direct the member organisations on their internal management, and would not be accountable for the performance of individual organisations in the network.

76 Networks would need to be fit for purpose and would vary according to circumstance. The Advisory Group recommends central agencies and the change implementation group work with chief executives and Ministers to identify sectors or outcomes that should be organised as networks and report back to Ministers.

77 If networks enable better coordination of agencies and provide a platform for collaboration, they will produce some benefit even if they operate only at the officials level. To the extent that collaborative behaviour between officials is modelled on and lead by collaborative behaviour between Ministers, the potential for networks to generate gains will be greatly enhanced.

Comprehensive coverage networks

78 The PSA believes we should go further than this and create "hard-wired" networks across the State sector. These would be:

  • permanent, or at least long term;
  • comprehensive (every department and relevant Crown entity would be assigned to a network) - and exclusive (an agency would belong to only one network); and
  • led either by the chief executive of a component organisation, or by a "super-CE" appointed to a separate role running the network with a secretariat to assist them.

79 In addition to the powers of "soft" network leaders, "hard" network leaders would have the right to direct the chief executives of component organisations on internal management issues, and might also have the power to co-sign the statements of intent of member organisations to ensure alignment with the plans of the sector and the Government as a whole. This sort of arrangement would be well on the way towards merger of agencies into a super-ministry. Changes to the State Sector Act would be required.

Structural change

80 Structural change is not a panacea for the problems facing the State sector today, and it can be a blunt and expensive instrument. Having said that, we believe some structural consolidation will be beneficial, leading to fewer agencies overall - bigger, more "federal" departments comprising sub-units with compatible objectives. We recommend that the Ministers of State Services and Finance lead a targeted review of the opportunities for structural consolidation, looking in particular at:

  • Crown Entities;
  • Whether small agencies (departments or Crown entities) should be merged with other agencies, retaining separate identities if necessary, (e.g. as the Ministry of Consumer Affairs has within the Ministry of Economic Development);
  • The effectiveness of policy/operations splits with a view to reversing them unless they are clearly adding value;
  • Sectors where there are Ministerial concerns about performance or alignment.

81 This review should use a clear set of criteria, developed by the central agencies and agreed by Ministers, for determining what functions should be carried out by what type of agency (department, Crown entity, or something else), and when functions should be combined or shared within an agency, and when they should be separated.

Crown entity governance

82 Notwithstanding the preceding recommendations on structural change a number of Crown entities are likely to remain in Crown entity form. We recommend that Government moves to resolve the confused governance arrangements that continue to characterise the Crown entity sector, and that the Ministers of State Services and Finance develop detailed proposals on Crown entity governance, in light of the review of the centre, including proposals for legislative change.

Recommendation: We recommend that Ministers agree to a series of initiatives to address fragmentation and improve alignment of State sector agencies with the Government's objectives including:

  • establish networks of related agencies to better integrate policy, delivery and capability-building in the State sector;
  • reduce structural fragmentation in the State sector by a careful process of structural consolidation, including the preparation of criteria to be agreed by Ministers, looking in particular at:

    i Crown Entities;
    ii the effectiveness of policy/operations splits;
    iii small agencies; and
    iv sectors where there are Ministerial concerns about performance or alignment;
  • improve the governance of Crown entities with particular attention to improving the clarity of relationships between Ministers, departments and Crown entities, and strengthening those elements of the public management system that enable whole-of-government action;
  • reduce barriers to resource reallocation arising from the Government's budget and financial management system and promote flexibility in service delivery in pursuit of outcomes for citizens while maintaining appropriate accountability to Parliament;
  • investigate whether further mechanisms are needed to enhance the evaluation environment, taking into account the recently established Social Policy Evaluation and Research Committee.

People and culture

83 People are the most important part of the public management system. Good people can often make poor systems work; the reverse is seldom true. Good people need to be imbued with a spirit of service to the community. The Standards Board has made a strong case for building the public service ethos. We endorse their recommendations.

84 State sector values and ethos will be promoted through the staff development programme discussed below and will need to be supported by the involvement of Ministers, the PSA, Crown entity boards and chief executives, along with the SSC. Leadership on values and ethos goes beyond chief executives, and we see enhanced senior management development as an important component of promoting ethics in the State sector. The State Sector Act will need to be amended to extend the Commissioner's mandate to the Crown Entity sector.

Developing staff and leaders

85 The State sector includes a hugely diverse range of employers. Different agencies have different human resource needs. Reflecting this diversity, individual organisations will continue to employ and develop their own staff and undertake their own human resource planning. Many aspects of human resource management, however, are common to all State sector organisations. There would be benefit in the progressive adoption of common standards, the sharing of good practice, and the development of joint systems or programmes. We propose, therefore, that individual agencies' human resource planning be done within the context of an overarching State sector human resources framework. This framework would cover the Public Service and an appropriate range of Crown entities (the actual coverage would need to be considered further during the development of the framework).

86 Decisions about organisational and people capability in the State sector can potentially be made at one of several levels: within individual organisations; within networks or sectors or other groups of organisations; or at something closer to whole-of-State-sector level. The process of developing the framework would involve discussion, and recommendations to the Government, about the appropriate level at which decisions should be made on a wide range of matters affecting organisational capability and human resources, including:

  • Overall means of improving the effectiveness of the sector and departments and their ability to provide quality services and outcomes by addressing issues of training and development, workloads, EEO, culture values and ethos, constitutional knowledge, the Treaty, responsiveness to Maori, leadership, workforce planning, and interagency exchanges and secondments;
  • Principles that should guide ways of addressing employment conditions such as Superannuation, leave provisions, occupational health and safety, remuneration systems, recruitment, competencies, recognition of service and performance management systems;
  • Overall means of implementing the Partnership for Quality agreement so that employees are enabled to participate collectively in the management of their workplaces through the PSA.

87 A common framework on some of these matters would contribute to improving the effectiveness of State agencies, and also to State servants' perception that they are part of a larger entity than just their own agency.

88 We recommend that the State Services Commissioner should be charged with leading the development of the framework with the involvement of a range of stakeholders, including the tripartite forum (Ministers, Public Service Association, and Public Service chief executives), and in keeping with the Partnership for Quality agreement.

89 Supporting the development of such a framework would require SSC to broaden the focus of its long run labour market data collection and analysis, and we propose that this focus be expanded to include Crown entities (but excluding SOEs and CRIs), without duplicating work already going on in other sectors (e.g. health and education). We note and encourage the Commission's recent work to improve the depth and detail of its HR analysis within the Public Service through such things as the Human Resource Capability unit record collection and the Career Progression Survey.

90 Matters already identified as requiring further work are the development of:

  • Staff, not just for their current roles but preparing them to play new roles in future, perhaps at higher levels, perhaps elsewhere in the State sector;
  • Managers, to be more effective in their people management roles - in providing performance management, training and development, mentoring and career support to their staff; and
  • Staff at all levels - not just managers - to provide leadership, including innovation, responsiveness, risk management, partnership and teamwork.

91 We recommend further promotion of the use of generic public sector standards and qualifications within State sector organisations (such as the unit standards being developed by the Public Sector Training Organisation); identification and promulgation of good practice in coaching and development of staff by managers, including investigating training options to improve the skills of managers; and work to identify and promulgate good practice in leadership skills training for staff at all levels.

92 We encourage the Central Agencies, particularly the SSC, to actively develop initiatives that build leadership capability and innovation. We recommend that SSC, working with Chief Executives, take a more active role in developing senior staff, including the identification and fostering of talent in the context of a sector wide senior management competency framework.

93 We propose that the group of the 300 (say) most senior staff (including chief executives) across the State sector be identified, and receive a greater investment in training and mentoring. They would have an explicit duty to actively model and develop a professional, public service culture.

94 We also encourage the State sector to form a partnership with a strategic provider of top-level training, probably one or several tertiary education institutions.

Recommendation: We recommend that Ministers agree to a series of initiatives to better develop staff and leaders in order to enhance the capability of individual organisations and the Public Service as a whole (and where appropriate the wider State sector) to better serve the needs of Ministers and citizens including:

  • Developing an overarching human resource framework, including clarity on which parts of the framework apply to which Crown entities;
  • Promotion of more widespread use by State sector organisations of generic public sector standards and qualifications (e.g. Public Sector Training Organisation unit standards);
  • Undertake a multi-agency project to review the coaching and development by managers of staff across the sector, identify areas where improvement is needed and promulgate good practice, including investigating training options to improve the coaching and development skills of State sector managers;
  • Undertake a multi-agency project to review current practice in leadership skills training for staff at all levels, identify areas for improvement and promulgate good practice;
  • Develop detailed proposals for a more collective, centralised and consistent approach to the development of senior managers across the Public Service, (and to a lesser extent into the wider State sector) based on a common competency framework that gives weight to both policy development and implementation skills;
  • Report back on how best to charge senior staff across the sector (including but not limited to Chief Executives) with modelling and leading the development of a modern, professional, Public Service culture - proposals to include consideration of training and development opportunities;
  • Form a partnership with a strategic provider of top-level training for senior State servants, probably one or several tertiary education institutions.


Other issues

New technology

95 No discussion of the State sector of tomorrow would be complete without mention of the impact of new technology. New technology will impact on service delivery, on back office functions, on citizens' expectations. It potentially holds the key to a more seamless provision of a range of services that adapts to the needs of individuals and communities, delivered through a range of channels - physical and electronic. Some functions of the State may come to be organised around knowledge bases or a client-based view of Government services.

96 This is being dealt with through a different process - the e-government strategy - but we are mindful that the State sector needs to be alert to the implications and opportunities of e-government, which may have a long-term impact on the accountability processes and structures of government. A further discussion of the impact of new technology is included in Appendix 7.

Treaty guidelines

97 Different agencies have been working out, largely in isolation, how they should incorporate the principles of the Treaty of Waitangi in their activities. This has resulted in a somewhat ad hoc variety of arrangements in an area where consistency would be valuable.

98 There would be benefit in enabling agencies to more easily share their knowledge with others, and for the sector as a whole to achieve greater clarity and consistency in its approach. Te Puni Kokiri has recently completed work on a guide to the principles of the Treaty, which collates the jurisprudence of the courts and Waitangi Tribunal. We understand that TPK and the central agencies are considering ways in which they can build on this work to encourage more consistent consideration of the practical implications of the Treaty of Waitangi for policy development and operational activities. We endorse this work.

Innovation, risk and opportunity

99 Innovation is the application of creative, unusual or novel solutions to problems or needs. There are features of the State sector, such as high visibility and political risk, that discourage innovation and tend to encourage cautious management behaviour. To offset these inhibitors of innovation requires a deeper level of engagement between Ministers and officials, so both sides understand the risks and can agree on the strategies to manage them. Moving to fewer agencies - and hopefully fewer but more substantive relationships for Ministers should help, as will the focus on outcomes and the Circuit Breaker teams.

100 We think we need more than this. We recommend an innovation project facilitated by Central Agencies, at least in the first instance, that assesses current innovative activity in the State sector, suggests adjustments in the public management system to actively enhance it, and identifies other ways of encouraging innovation. This project should use external expertise to undertake this stocktake and recommend adjustments. This could include putting in place some indicators of an innovative State sector that can be tracked over time, thereby serving as a continued impetus for innovation.

Recommendation: We recommend that Ministers agree to undertake a project to assess the current state of innovation in the New Zealand State sector, to propose enhancements to the public management system, and to establish some indicators of innovation in the State sector that can be measured over time.

A new focus for central agencies

101 The Advisory Group believes that central agencies need to take more leadership, particularly on "whole of government" matters. This leadership needs to be wider than just the Public Service. The Advisory Group notes there has been a number of moves in this direction by the central agencies, but thinks they need to go further. In doing this they will need Ministerial support. We see this greater leadership being developed in a number of practical ways:

  • Being more willing to identify areas that require Ministers to direct a common approach, and advise Ministers accordingly. Central agencies in consultation with chief executives should develop some clear criteria for deciding when a more directive approach is desirable;
  • An advisory role to government agencies in areas of central agency expertise (e.g. the SSC on human resource management and capability, Treasury on financial management and other aspects of performance management, DPMC on how to align with government goals better). This could include general information provision, as well as knowledge of good/best practice and sharing benchmarks;
  • Brokering collective action, either by coordinating projects directly, or identifying others to coordinate projects. This could include input or management issues, as well as policy and operational matters (e.g. joint ventures or common purchasing);
  • Direct the adoption of standard approaches. Central Agencies must exert stronger influence and at times seek the authority to direct agencies to adopt standard processes, approaches or systems;
  • Better engagement with departments and Ministers on priority setting and planning, using vehicles such as statements of intent, output plans and the budget process. Collectively, the central agencies should be able to more effectively identify areas of duplication, gaps and conflict;
  • More leadership by the SSC in human resource matters including the development of a state sector wide human resource framework and promoting State sector values (discussed under People and Culture above);
  • More regard to, and engagement, with the wider state sector. This should include an extension of the State Services Commissioner mandate to Crown entities. For the most part the Commissioner's scope is currently limited to the public service. We recommend his mandate to advise on capability, and exert leadership on matters such as values and ethos, be extended;
  • Leadership of the change process to implement the direction proposed by the Advisory Group.

Recommendation: We recommend that Ministers:

Agree that the Central Agencies (State Services Commission, Treasury and Department of the Prime Minister and Cabinet), collectively and individually, should exert more effective leadership across the wider State sector by formally adopting as part of their core business a responsibility to lead the State sector on whole-of-government initiatives. This to include:

  • Advising Ministers where a more directive common approach is needed;
  • An advisory role to government agencies in areas of central government expertise;
  • Brokering collective action;
  • Directing the adoption of standard approaches;
  • Better engagement with departments and Ministers, including over Statements of Intent and Output Plans;
  • Leadership of the change process.

Agree that the mandate of the State Services Commissioner should be extended to enhance his ability to collect information from and provide leadership to State sector organisations beyond the Public Service.

Leadership board

102 Some members of the Advisory Group consider the centre needs to be strengthened further by forming a Leadership Board. There are a number of options for this Leadership Board. It could have direct powers over chief executives and a direct accountability to Cabinet, inserting a new layer between Cabinet and chief executives. Alternatively a Leadership Board could have an advisory and support function, to enhance the leadership of the Central Agencies without diluting their responsibilities. The Leadership Board would in this instance be accountable through the Central Agency heads to the Prime Minister, Minister of State Services and Minister of Finance. Its functions could include the following:

  • Acting as an intelligence or surveillance function for Cabinet;
  • Advising government on whole-of-government issues;
  • Brokering innovative and cross-cutting initiatives as specified by Cabinet;
  • Considering sector wide ownership issues and developing ideas to correct problems;
  • Maintaining an overall review/oversight of the performance of the State sector;
  • Appointing leaders for specific projects, assisting in holding them accountable for the outcomes, ensuring they receive recognition for success;
  • Overseeing sectoral and departmental planning so that long-term outcomes are increasingly supported by short-term planning;
  • Supporting both the mandated regional coordination mechanisms and the circuit-breaker teams;
  • Supporting the e-government programme, work on State sector values and any other whole-of-government priorities;
  • Communicating Ministerial priorities across the State sector to help make them happen smoothly and quickly.

103 The membership of the Leadership Board could be determined once the functions were clarified but would probably consist of the Central Agencies CEs, other public service CEs with delivery experience and possibly some state sector CEs.

104 There are risks associated with having a Leadership Board. It may add another level of bureaucracy without concomitant value, reduce flexibility, and exclude important interests. For these reasons, and because they did not believe there was evidence of the need for such a body, some members of the Advisory Group did not support the Leadership Board proposal.

What will you see, feel and hear which will be different?

105 We propose three groups of recommendations to give more power and support to the interface of the State sector with citizens, make it easier for Ministers to get the system to respond to their aspirations, and make the State sector a better place to work. Our intention is that in time these proposals will make a tangible difference for Ministers, citizens and state sector staff.

What will be different in 5 years time for .....

... Ministers

... Citizens

... Staff

Through better integrated service delivery (Circuit Breaker Teams, regional coordination and stronger policy/operations connections)...

Will see more innovative solutions dealing with long-standing problems.

Will find complex problems get sorted out better. Will feel well-served by public servants.

Will see their views being listened to and put into action. Will find work more satisfying.

Will hear fewer complaints about coordination and duplication.

Will notice that they are not having to handle so many government processes or organisations.

Will see senior Wellington people at the frontline, will have more contact with people in other sectors.

Will find that things happen more quickly and smoothly at the frontline.

Will feel that government in Wellington feels less distant.

Will notice that their views get reflected in policy, will feel connected to Wellington.

Through less fragmentation (networks, structural change, accountability systems) ....

Will deal with fewer agencies and noticeably fewer barriers.

Will notice that duplication is less.

Will be working with other agencies more.

May find their previously separate organisation is now part of a larger one.

Will find relating to the public service simpler and more straightforward.

May be working under different management or in a different organisation.

Will see less clutter, less paper, better information. Will have to resolve conflict amongst agencies less often.

 

Will understand the overall vision and purpose better.

Through building people and culture (values and ethos, leadership, training, senior management development, human resources strategy) ....

Will hear public servants proud of their work and positive about their contribution.

Will gradually feel that the public service is in good heart and will have greater confidence in public servants.

Will receive more standardised training and education.

Will feel more confident that state sector staff working at the front-line understand and support Government's aspirations.

 

Will talk more proudly about their jobs, and the value of the State sector.

What happens next?

106 The proposals and new directions set out in this package add up to widespread and far-reaching change. That change, however, will happen incrementally and across the board, as the culture changes and, with it, expectations and behaviours. The risk with wide but incremental change is that momentum dissipates and no real shift occurs. This risk is greatest in those proposals where inter-agency action is required, and in the proposals for tackling front-line, service delivery issues.

107 An important part of managing this risk will be strong leadership from Ministers and central agencies. Indeed, the sort of transformation we anticipate will only happen if Ministers and officials work together to change the way they interact. Just as officials will need to take account of whole of government considerations so too will Ministers need to model and lead this stronger collective approach.

108 If Ministers agree with the directions set out in this report we suggest that the State Services Commissioner should assume overall responsibility for coordinating the departmental implementation effort, with appropriate reporting to Cabinet. Given the scale and scope of the changes involved, we believe the Commissioner should be supported in this role by a change implementation advisory board. Such a board would draw on the perspectives of a range of organisations in the State sector and beyond, including representation from the Public Service Association. We note that a similar arrangement is in place and working well to guide the e-Government strategy: the Commissioner is accountable for delivery of the strategy, but an advisory board including both State and private sector members provides guidance and expertise, and champions the strategy with stakeholders.

109 Accordingly, we recommend that the Commissioner establish a change implementation advisory board to advise and support him in overseeing the implementation of the package of proposals from the Review of the Centre. We suggest that the Commissioner be invited to report to Ministers early in the New Year on the composition, terms of reference, and work programme of this board.

Recommendation: We recommend that Ministers agree the State Services Commissioner should form a Change Implementation Advisory Board to assist with the implementation of the package of work arising from the Review of the Centre, to include a representative of the Public Service Association.

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