Operating Intentions

What are we seeking to achieve?

The State Services operate in a dynamic and fiscally constrained operating environment. The State Services Commission is working towards a system more focused on results and measurability.

The outputs delivered under this objective will enable the State Services Commission to lead the State Services system in delivering on the results that matter, and proactively addressing system, sector and agency performance.

What are the central agencies seeking to achieve?

The central agencies have a common interest in leading State sector reform and improving State sector performance – improving the quality of services within existing baselines, seeking efficiency improvements across the State sector and ensuring ongoing fiscal sustainability.

Each central agency has a different mandate and different outputs aligned to improving State sector performance. The agencies work collaboratively in some areas, such as clarifying Ministerial expectations and individually in others, such as specific policy advice.

How will we know we are achieving this?

An increased focus on results supported by better governance, structures and service delivery will ultimately result in better services being provided to the public. A high performing State sector with lower service costs supports a stable and sustainable macroeconomic environment. The key activities selected by the State Services Commission below are all designed to help Ministers and their agencies make decisions that result in better services at lower cost. The State Services Commission will be able to track this through improvement in New Zealanders’ overall quality score for public services as measured in an independently administered survey and through core Crown expenses falling as a proportion of GDP over the next three to five years.

What will we do to achieve this?

Our emphasis is on leading State sector reform and supporting agencies and chief executives to deal with tough economic times, reduce baselines and deliver on expectations of improved service delivery. Often this will involve working with one or more of the other central agencies.

A. Advise Ministers and agencies on sector and system performance improvement, system design, agency collaboration and governance arrangements

The provision of advice and therefore influence is one of the most significant outputs of the State Services Commission.

The State Services Commission is committed to providing high quality advice and support to improve performance, leveraging off our experience, monitoring programmes and expert networks. We will work closely with Ministers, helping to provide additional clarity to chief executives around Ministerial expectations of service delivery.

A particular focus over the medium term will be to equip agencies and their chief executives to deal with the the current challenging operating environment. The Government has signalled its commitment to reforming the State sector, with a focus on enhanced services to the public, value for money, less complexity and less duplication. The State Services Commission will continue to offer advice to Government on how to achieve this.

Not all agencies require high levels of support and advice. The State Services Commission focuses on priority agencies that need to lift their performance, on agencies where warning signs are identified and where rapid involvement will reduce the risk of poor performance and in strategically important larger agencies that deliver critical services to the public.

Advice will focus on:

• improving quality of services to New Zealanders and stakeholders, responsiveness to Ministers and better alignment of functions to achieve government priorities

• reducing cost in the short to medium term by eliminating duplication, achieving economies of scale and disestablishing lower priority functions

• improving leadership and governance.

The State Services Commission is continuing to refine the metrics we use for measuring the quality of the advice we provide and will be integrating the recommendations of the Review of Expenditure on Policy Advice into the Statement of Intent 2012-15. A measure will be in place for 2011/12 that provides for external review of the quality of the range of different types of advice that the Commission provides. In the interim, we have developed a preliminary measure of the quality of advice in consultation with Treasury and the Office of the Auditor-General.

B. Assess the effectiveness of agency, sector and system performance

The State Services Commission will use a number of tools to measure and understand how well agencies are performing. Making an assessment of performance helps us deliver advice on how to make improvements to areas like cost-effectiveness and delivery. We will be recalibrating the balance of our assessment activity from chief executive performance reviews to agency and sector performance improvement.

The State Services Commission is aiming to complete Performance Improvement Framework (PIF) reviews for most of the large service delivery agencies by mid 2012. The PIF is a joint central agency initiative to help senior leaders drive performance improvement across the State Services.  The first two tranches of PIF results indicated that, amongst other things, agencies are good at reacting to Government priorities (these tend to be shorter term objectives – what will be achieved this year). They are not so good in the strategic capability space where agencies and their leadership find it harder to articulate medium to longer-term strategic objectives and position their agencies to respond to future demands. The reviews also indicate that agencies struggle to measure their efficiency, which hampers their ability to review and reprioritise activities. This insight is helping to inform and influence our interactions with agencies and is shaping our work to enhance our support of agencies in strengthening their strategic leadership.

C. Advise Ministers and agencies on pay and employment conditions and employment relations and manage senior Public Service remuneration

Wage costs are a significant component in the State sector’s overall expenditure. In an environment where the State Services face considerable fiscal pressure, the State Services Commission will continue to provide advice to Ministers, and expectations to agencies, on pay and employment conditions and employment relations across the State Services. We will work with agencies to ensure any increases in remuneration, both individual and overall, are tied to productivity improvements – such as flexibility in hours and work content.  

In addition, the State Services Commissioner’s role includes setting and reviewing the remuneration of Public Service chief executives and advising on or approving the proposed terms and conditions of employment of Crown entity and subsidiary chief executives.  The Commissioner therefore has a direct influence on the remuneration received by almost 150 chief executive positions in the State sector.

During this period of fiscal restraint, the Government expects the State sector to focus on using tax payers’ money wisely. Accordingly, the Commissioner will be working to ensure that pay-setting for chief executives and other senior staff in the State sector continues to model a high level of restraint.

What are we seeking to achieve?

Developing a stronger Public Service leadership is a priority for both Government and the State Services Commission. Across the system over the next three to five years, we are seeking to lift strategic capability at senior levels and to support leaders to get more out of agencies, specify results and make necessary changes within a challenging environment.

The outputs delivered under this objective will enable the State Services Commission to lead the State Services system in delivering on the results that matter, proactively addressing system, sector and agency performance and appointing and developing system leaders.

How will we know we are achieving this?

The first eight Performance Improvement Framework (PIF) assessments have identified the articulation of Vision, Strategy and Purpose as a key weakness for Public Service leaders. This is a critical challenge in a time of significant change, and we will be looking to see an increasing proportion of agencies being ‘well placed’ or ‘strong’ on Vision, Strategy and Purpose over the next three to five years.

What will we do to achieve this?

The State Services Commission is responsible for ensuring sound leadership in the Public Service through the effective recruitment, performance management, development and remuneration of Public Service chief executives and fostering leadership development and talent management within agencies, thereby growing the pool of future chief executives. Our priorities in delivering these outputs is lifting chief executive performance – ensuring that chief executives are thinking about improving service delivery in an environment where money will be tight for several years – and making sure that management capability in the second tiers of their organisations is being prepared for further leadership challenges. The State Services Commission will appoint and develop leaders who can contribute to the leadership of the State Services, not only the leadership of a single agency. We will work with agencies to prioritise developing talent management and succession plans. We will communicate to emerging leaders the requirements for leadership in the State sector in the future. Through delivering these outputs, the State Services Commission can ensure that the State Services are well led and contribute to its key outcomes.

D. Appoint Public Service chief executives

A high performing Public Service is dependent on high performing chief executives. The appointment, induction and, in some cases, reappointment of high quality chief executives is a key mechanism for promoting high performance. The State Services Commission is committed to continuous improvement and to delivering best practice appointment processes that have the confidence of Ministers, chief executives and agencies.

E. Manage chief executive performance

Every Public Service chief executive is contracted directly to the State Services Commissioner as their employer, and this employment relationship is a key lever for influencing the leadership, performance and productivity improvements of agencies. The performance management process, which provides regular feedback and updating of expectations throughout the year, is designed to help chief executives develop. The critical elements in this process are setting expectations in consultation with the Responsible Minister around what the chief executive will achieve, providing support and counsel to chief executives, both in their own professional development and around the complex issues they face in leading their agencies, assessing their performance and where necessary, holding them to account. The State Services Commission will be leading and requiring a focus on delivering results across the State Services and will be working with chief executives to identify the priority results for their agencies and sectors and then holding them to account for progress in achieving those results.

F. Develop capability

The capability of chief executives, and senior managers as the talent pool for future chief executives, is a key driver of agency performance. Boosting the size and quality of this pool is a priority for the State Services Commission.  Working with agency chief executives and other stakeholders to improve the diversity of senior teams and lifting their strategic capability in response to insights from the first tranche of PIF assessments will be a focus of this work.

The State Services Commission will concentrate on using the chief executive performance management process to communicate expectations around leadership development and talent management, using system-wide forums to identify and develop talent at a system level and will be exploring ways of providing talented leaders with more development opportunities across the State Services, for example through secondments.

* A new measurement approach to confirm with agency chief executives that PDPs are in place and being pursued for potential leaders will be developed and applied in 2011/12.

What are we seeking to achieve?

High levels of trust enable State servants to work effectively with the public. Institutional integrity, a corruption-free bureaucracy and high quality government institutions create a stable platform for business investment and economic growth.

The outputs delivered under this objective will enable the State Services Commission to lead the State Services system in addressing emerging trust and integrity risks.

How will we know we are making an impact?

We will know that our interventions, and those of others, are making the desired impact when New Zealand continues to be rated as one of the leading countries in Public Service probity as measured by the Transparency International Corruption Perceptions Index.

What will we do to achieve this?

The State Services Commission is responsible for a number of mechanisms to ensure that standards of integrity and conduct are not only in place, but actively promoted, and that, where potential breaches have occurred or risks emerge they are dealt with. Whilst consuming a relatively small amount of organisational resource, the Integrity and Conduct programme is a critical underpinning for all of our work across the State sector.

G. Set standards of integrity and conduct and investigate issues regarding the integrity and conduct of State servants

The State Sector Act 1988 empowers the State Services Commissioner to set minimum standards of integrity and conduct across the Public Service and Crown entities. The State Services Commission’s Integrity and Conduct work programme is based on promoting the code of conduct for the State Services.

The State Services Commission provides advice and support for integrity and conduct across the State Services, ranging from responding to the individual queries of State servants to providing advice to agencies and chief executives on potentially complex integrity and conduct issues. Expectations around integrity and conduct are set with chief executives at the beginning of each performance cycle. The chief executive and their agency’s performance are assessed against these expectations as part of their annual performance review.

In addition to our work around the code of conduct, the State Services Commission is also responsible for the Protected Disclosures Act, which provides protection for employees who draw potential misconduct to the attention of relevant authorities.

The State Sector Act 1988 establishes that the State Services Commissioner may conduct investigations and make reports in respect of the Public Service. These inquiries and reviews provide assurance not only to the Government but also to the public that the activities of agencies and individual State servants are being carried out within the law and within the bounds of proper conduct.