John Lloyd: why HR in the public sector must change

By John Lloyd

August 25, 2015

This is an the full keynote speech by John Lloyd to the Australian Human Resources Institute’s HR in the Public Sector Symposium in Melbourne on August 25, 2015.

The case for change

Human Resource management in the public sector must change to remain relevant and contribute more.

It is tempting to talk of compelling challenges demanding a new human resources focus that will lead to an epoch of innovative people management.

I have worked for 40 years in workplace relations giving me a window into human resources. My sense is both human resources and workplace relations are adaptive.

Proficient practitioners change their practices and strategies to achieve outcomes set by broader business trends and challenges.

Now as public service commissioner I am responsible, pursuant to my Act, to engender an Australian Public Service that is apolitical, effective, efficient and acts with integrity.

APS HR has adapted but I venture not as much as many corporate HR practitioners.

So we now face substantial HR tests. A factor that will impact on government sector HR for many years ahead is the need for Budget sustainability and repair. It is a given. If ignored it will result in brutal adjustments at a later date.

Another factor is that significant workforce change will continue to be caused by digital transformation. It is inevitable that work will be redesigned. It is inevitable that some jobs will be displaced. Also, new jobs will be created.

In common with every function, some existing HR jobs will be displaced by software and computing power.

It will be necessary, if we are to meet these tests, to modernise our employment framework. The current highly regulated, reactive and prescriptive framework will have to change. Change is necessary so that we can attract, utilise and retain the best people.

The idea of public service reform, including those which are driven by new technologies is not a new one. You can trace this theme back to the earliest days of the service.

Also, it has always been the case that public servants have a duty to achieve the goals set by governments in the most efficient and effective ways.

The first public cervice commissioner, DC McLachlan said in his 1904 annual report:

“Efficiency and economy must be the watchwords of this Service if public confidence is to be attained and maintained”

As the current Commissioner, I couldn’t have made the point better myself.

In establishing a capacity to meet the future challenges I am devoting more attention to how we expand HR’s contribution to achieving APS business outcomes. HR can and should make a greater contribution.

Three areas where HR can add the most value

I want to focus on three areas where HR has the most potential to add value to the Australian Public Service:

  1. Strategic workforce planning
  2. Identifying and managing talent
  3. Improving performance management capability

I will also talk about the role of my organisation in:

  1. Establishing a modern employment framework
  2. Developing HR capability within the APS

The two main drivers of change for the public sector are digitisation and budget pressures.

They create new HR opportunities, including:

  1. Meeting more manager and employee needs through easy to use self-service systems
  2. Using sophisticated recruiting and learning and development software to improve outcomes at a lower cost
  3. Outsourcing non-strategic HR functions
  4. Informing decisions with real-time HR data

Let me turn to the three key areas of workforce planning, talent management and performance management.

Strategic workforce planning

A good workforce planning process identifies future workforce needs in time to develop them internally or bring them in from outside. This has to be done in the most efficient and effective ways.

A good workforce plan is one which is developed and owned by the executive team and line managers. HR should take the lead to ensure that the right conversations occur before the plan is developed.

It should start with a discussion of the trends and issues most likely to shape the business strategy and labour requirements.

A threshold question for the executive team is whether they have the leadership and workforce capability to implement the business strategy.

If HR has done its job, the discussion will be informed by a scan of the workforce trends that could impact the business. HR should also bring to the table relevant metrics and business intelligence.

Once the top business problems have been identified, HR should be able to advise on the best strategies to source and manage talent.

This should include the right mix of core workers, contractors, labour hire, part time and casual staff and other sources of expertise.

HR has to demonstrate a capacity to develop clear strategies on issues like workplace relations, ageing worker profile, workplace culture and termination procedures.

Also, more sophisticated thinking about talent and performance management is required. Let me turn to that now.

Identifying and managing talent

I want the best and brightest people to aspire to work for some or all of their careers in the Australian Public Service.

To do this we need to think carefully about the employment brand we project. This includes thinking about what distinguishes the APS from other organisations.

The APS has to be seen as a place where:

  1. People have the opportunity to do important work for their country
  2. Systems, structures and processes enable high performance rather than impede it
  3. Investment is made to develop those with the most potential to increase their contribution.

Young people expect to have access to the best technology to help them do their work.

We have some way to go to achieve this. I hear new graduates complain that they have better technology at home than at work.

The work of the new Digital Transformation Office is a significant development. The blog of the new CEO Paul Shetler states:

“My goal is for Australia to become the country that shows the rest of the world how to deliver superb public services — across all channels — that are designed around the needs of users first and foremost”

I think this proposition is one our younger public servants will want to hear.

Let’s assume that we have attracted the best people to public service. The challenge for leaders is to get the best out of them, to engage them to grow their contribution.

In recent years, we’ve focussed our efforts on providing intensive development for talented senior executives. This is only part of the picture.

We are now working with colleagues across the APS to broaden our approach to talent development and management. This includes ways to attracting talent from outside the APS.

Many of the best future public servants will be those who have worked across different sectors.

The APS will always be an organisation comprising career public servants. They play an important role by ensuring there is a reservoir of experienced expertise. They need to engage regularly with those outside the public service to appreciate the impact of their work on others and seek new ideas.

In a public service where employment is, by default, ongoing there is a risk that capability will fall over time as the impetus for creativity is muted.

In managing our talent, we will address career planning, engagement and retention so that we have the right people ready for critical roles now and in the future.

To this end talent management is fundamentally linked to workforce planning.

We conduct an annual APS employee census. Employee census results confirm the urgent need to do this.

It was worrying to see that only 30% of people agree that senior leaders give time to develop talented people.

Addressing this is a priority for my colleagues and me.

Improving performance management

Employees deserve honest and constructive performance feedback.

The APS has struggled to effectively manage underperformance. This is a clear and consistent message from employees themselves. We see this in current census results.

Public servants who are not engaged by their work or cannot contribute at the required level should consider seeking other opportunities. This could be another APS role or something outside the APS.

Some companies actively manage out the bottom 10 percent of performers every year.

Commercial pressures mean a private sector manager cannot ‘carry’ someone who is underperforming. A private sector manager who is not addressing underperformance will themselves be called to account.

Why should people and how they perform be any less important in the public sector? Public resources are as important as those allocated by shareholders.

A good performance management systems starts with capable managers.

This includes the basics such as how to structure work, allocate responsibilities, develop people and monitor performance. The best managers ask their staff what else they can do to assist an employee work to improve their performance.

HR has a significant role to play in coaching managers to improve performance management conversations.

When things are not working out a manager must respectfully provide an employee with feedback about their performance. For the employee, this should be a constructive experience. Performance management should not be punitive. Although the end may be a separation.

While HR should assist managers to deal with underperformance, the primary focus should be on enabling high performance. This means ensuring the systems and processes work well and do not get in the way of performance.

Good organisational design is also critical to ensure that accountabilities cascade through the organisation and are linked to its purpose and goals.

The role of the APSC

I see the employment framework as encapsulating hiring, termination and everything in between.

It takes too long to recruit someone into the APS. A good outcome is to welcome someone within 10 – 12 weeks of commencing the process. We have to ensure that fair treatment and merit selection underpin the recruitment of staff. But there are more efficient methods available. Applications should be succinct, interviews short and focussed and referee checks limited to genuine contenders.

The recruitment experience of heavy process is repeated at many stages of the employment journey. We are constantly addressing this and implementing more efficient means of dealing with staff.

It is my view that some aspects of the public sector employment regulations warrant review.

This includes Commissioner Directions which we are simplifying.

The APS, like other sectors, will have to access non-ongoing employees, contractors, labour hires, part-time and casual employees. The access should not be unduly complicated or restricted.

To use an often quoted workforce planning goal: this is the best way to ensure the right people, with the right skills are available when and where they are needed.

We will also address improved staff mobility and the use of effective employment termination arrangements. Time prevents me from expanding on these but such changes are important.

The APSC through employee surveys, employer censuses and data collection processes one of the largest employment data bases in the country. We are working to use this to develop better business intelligence for agencies about the workforce.

Developing HR capability within the APS

A boost to the capability of our APS HR managerial capacity is required.

This is a view shared by many of my colleagues. The conduct of bargaining highlighted HR capability issues in that practice area.

We focus too much on transactions and not enough on workforce strategy.

The APSC has commenced to address this in collaboration with agencies:

  1. A group of HR managers is undertaking HR capability development and accreditation with the Australian Human Resource Institute;
  2. A small number of senior private sector HR professionals are being introduced to agencies to assist on major HR projects;
  3. Public service commissioners are working together to set HR management capability standards on a national basis; and
  4. We have developed a range of core management skills programs for agencies to educate line mangers to better manage people.

What makes a good HR leader. To me these are people with the capabilities and attributes to:

  1. Understand the business as the CEO sees it
  2. Demonstrate how you make the business more effective
  3. Create good business partnerships at all levels
  4. Source and use business intelligence about cost, capability and performance
  5. Competently outsource transactional and operational services
  6. Improve the skills of managers to manage their people

Reflections on public service

I have mentioned the immense employment data we collect. It provides excellent information about APS workforce metrics and attitudes. The 2015 census provides an encouraging view.

Pleasingly this year employee engagement has remained high, particularly job engagement and engagement with immediate supervisors. For example, 73% report their job enables them to use their skills. 80% of APS employees agree they have a good supervisor.

Importantly, most APS employees have told us they are tasked appropriately for their classification. 74% of employees have this view. 80% say they are clear what their duties are and 73% say they have the appropriate decision making authority to do their jobs.

For the first time ever the representation of women at the Executive Level 1 classification has reached parity with men. Representation for women in the Senior Executive Service reached 40%. Both are evidence that the APS building a workforce more reflective of labour markets.

Taken together this data indicates that we have a sound platform on which to build a better APS for the future.

Let me sum up all that I have said today with one piece of advice to help advance your own careers.

HR is an important profession with immense potential to make a greater contribution to public sector success.

If I was in your shoes today I would be finding ways to embrace technology and invest to build my skills so I could spend more time on strategic HR issues.

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