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Commissioner eyes private sector HR, not bandwagons

In the US, major blue-chip companies are reportedly getting rid of standard annual or six-monthly performance reviews and asking their managers to give employees more regular feedback in a less formal way throughout the year.

Could a similar bold reform work for an Australian government agency? Australian Public Service commissioner John Lloyd thinks it might be going a little too far, but is still keen to see a cultural shift towards high performance, including more meaningful feedback and ongoing conversations between managers and their staff about individual performance.

Last month, global accounting firm Accenture announced its employees would no longer go through formal yearly reviews, and instead receive more regular feedback on their performance in specific tasks from multiple managers in a less formal way. Other big American companies are moving in the same direction.

“I have some reservations about that,” Lloyd told The Mandarin this week. “I think any organisation has to be aware of its performance, how it’s going, how its staff are going — it’s very important for succession planning — so you do need a system.”

Accenture also said it would also stop ranking staff annually on a competitive scale with the bottom 10% being shown the door. That corporate policy, which Lloyd mentioned as food for thought in contrast with the public sector speaking to a recent human resources conference, was similarly trendy among big US companies when first introduced.

“In a company you tend to have a bit of an allegiance or you can build an allegiance to the firm because you know that your income in the future is bound up in the firm being successful.

Lloyd believes a formal framework makes it easier for supervisors to manage performance and less likely they’ll shirk the hard conversations: “Sometimes people find the issue of performance a bit confronting, particularly if you’re giving feedback about the need to improve. If you don’t have system you can park it to the side and not address it, so I think a formal system with ratings, I would be inclined to say is worthwhile.”

The APS commissioner has seen lots of management trends come and go over the years and is circumspect about jumping on every new HR bandwagon that rolls past. He says all employees have to take responsibility for individual performance, and it is not realistic that everyone can always be told they are doing well and given an “elephant stamp” just for participation.

A formal system of performance agreements and periodic reviews also makes it easier to address underperformance, according to Lloyd, who believes that a manager who fails to do so lets down the “good performers” in the team.

A substantive performance management refresh is a long time coming in the APS. A series of reviews and research projects over many years — most recently, Strengthening the Performance Framework — have highlighted widespread deficiencies and dysfunction in this area and suggested various fixes. Lloyd believes progress has been made and public servants are taking it more seriously than in the past.

“I think I would say it has improved from when I was last in the public service; I think that people do take it more seriously,” Lloyd observed. “One thing of course that differentiates us from the private sector is we don’t have performance pay attached to it, and I think that obviously a performance assessment is more real is there is an incentive of money attached to it.”

Learning from the private sector

The APS commissioner is sure that linking pay more closely to remuneration would improve the system but says it’s “a bigger issue” for another time.

“It’s about giving confidence to our staff who deal with these things to think of a better way of doing it. That’s very important and you don’t get that unless the people down the line who actually deal with this stuff start to think creatively and throw a few ideas around amongst themselves.”

Lloyd also thinks there is a marked difference between government jobs and the private sector, where staff are generally more keenly aware of the need to provide value to their employers. That divide has begun to break down, the commissioner observes, with more staff going back and forth between private employers and the bureaucracy than in the past, and is keen to accelerate that with more formal secondments.

“I think that people realise that generally there’s a bit of harder-nosed assessment of performance; I think they see that to get on, to get promotions, you have to be credible and to be performing,” he said.

John Lloyd
John Lloyd

Whatever approach is taken, Lloyd is keenly aware of the desired outcome: cultural change. That, he says, requires close attention from senior executives. “And if you don’t have that leadership from the people who are running the outfit, I don’t think you will get a good performance outcome,” he explained. “My sense is that managers are more attuned to that these days, and the importance of that performance culture.”

While the APSC pilots a secondment program with the Business Council of Australia and Australia and New Zealand School of Government, other agencies are taking the initiative to run their own. Sitting on selection panels for very senior jobs, Lloyd has been encouraged by seeing lots of strong candidates from outside government applying.

“[External candidates] recognise that it might be a drop in remuneration but it’s an attractive project, they think it’s got a career challenge in it for them, perhaps a career enhancement for them, so they’re prepared to come and do it, and then probably go back again to the private sector, which I think is good,” he said.

“And so it’s [already] happening a bit more than I think we realise, which is good. We do need it; it’s important.”

Lloyd believes the federal bureaucracy should concentrate a lot more on talent management — the subject of a new APSC guide — at the highest levels, based on what big companies like banks are doing. He thinks one key difference is the lack of loyalty to a particular entity among public servants.

“In a company you tend to have a bit of an allegiance or you can build an allegiance to the firm because you know that your income in the future is bound up in the firm being successful. There’s a bit of a sense in the public sector that you work for the government, and the agencies keep changing and morphing so there’s not quite that sort of strength of allegiance … in government agencies, to the agency itself.”

Simplify

Lloyd’s views are heavily informed by his previous role as Victoria’s red tape commissioner. Broadly in line with the prevailing trend in performance management, he thinks the APS systems should be stripped back to their essentials: a clear definition of the organisation’s role and where the employee fits in. He agrees most people want to be a valuable member of a successful team, and the aim should be to help them achieve that.

“In the Victorian government before I came to this job, I recruited a staff member, and we decided we should get a performance agreement for her,” he recalls. “I went on to the department’s intranet site and there was a 16-page explanation about how to start a performance agreement. Well that, I think, is perverse. I thought that’s not a good start; it suggests the process is too complex, so it should be a clear document, and short.”

The commissioner for federal employment is also completely on board with the idea that in a well-functioning system, performance reviews contain few surprises, because good managers give regular, easily understood feedback, as soon as possible and especially where improvement is needed. But managers have a responsibility to empower and support their staff as well.

If the boss is not providing the tools, professional development opportunities and autonomy to enable high performance, it will not materialise. Micro-managing and failing to follow through on professional development are common features of dysfunctional teams, says Lloyd, which executive staff should look out for in coaching the managers below them.

The commission has been doing its part by pumping out its guidance on topics like identifying high potential and having career conversations in simpler language and publishing it to a revamped website that makes it much clearer what is new and what is old. It launched the monthly APS News this year and now presents the statistics it collects for the State of the Service Report to a wider audience beyond the APS in small, easily digestible pieces via a new blog.

“Public servants have a great capacity to put out impenetrable material,” said Lloyd. I know myself I’ve looked around government websites and thought, ‘How could you ever understand or find what you’re looking for?’

“And that’s one of those reasons why private sector secondments are good, because you get a sense as to how hard it is for a business to manage regulation.”

Common sense is anything but common

Cutting back internal red tape is also firmly on Lloyd’s agenda to streamline management processes, which is detailed in the commission’s new corporate plan. He also agrees with Finance secretary Jane Halton’s recent comments that some of the procedures slowing down public servants are not strictly required, but followed anyway out of excess caution or just because that’s the way it’s always been done.

“It does happen; well, I think it does,” said Lloyd. “Our sense is that we establish guides and requirements and directions and whatnot for the agencies to comply with, and we do get a sense that sometimes they embellish those.

“They add more process to it, to meet their own internal requirements and they don’t need to do that, so I think all agencies — we do need to do it ourselves — need to look at what they do to cut down on that red tape.”

Often cutting back red tape is just blindingly obvious common sense, but somebody has to pipe up — and someone senior has to listen — for anything to change. The APSC, in one example, used to send other agencies a separate form to complete for each staff member that would go to spend time working in indigenous communities through the Jawun organisation. A staff member eventually suggested they change the form so multiple names could be written on it.

“It’s those simple things that I don’t know about as CEO unless I drill right in, which I don’t have time to do,” said Lloyd.

“It’s about giving confidence to our staff who deal with these things to think of a better way of doing it. That’s very important and you don’t get that unless the people down the line who actually deal with this stuff start to think creatively and throw a few ideas around amongst themselves.”

There’s good reason to believe that APS performance management will undergo a successful revitalisation as part of the huge suite of internal reforms being driven both by the APSC and the Department of Finance, as it handles the introduction of the Public Governance, Performance and Accountability Act.

At the same time, Lloyd points out, digital technology is poised to transform the nature of lots of government jobs and a big chunk of the APS workforce is nearing retirement, precipitating a major generational change.

“It’s often said that organisations that fail are those that are over-managed and under-led, and I think that a lot more of the public service now, and the people who lead the organisations, are more aware of that,” he said.

Author Bio

Stephen Easton

Stephen Easton is a journalist at The Mandarin based in Canberra. He's previously reported for Canberra CityNews and worked on industry titles for The Intermedia Group.