better governance

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ContemporaryGovernment

Challenges

Building Better Governance



© Commonwealth o Australia 2007

Tis work is copyright. Apart rom any use as permitted under the Copyright Act 1968 ,no part may be reproduced by any process without prior written permission rom theCommonwealth. Requests and inquiries concerning reproduction and rights should beaddressed to the Commonwealth Copyright Administration, Attorney-General’sDepartment, Robert Garran Oces, National Circuit, Barton, AC 2600, or posted athttp://www.ag.gov.au/cca.

ISBN 978-0-9803978-6-4



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Commissioner’s forewordMy responsibilities as Public Service Commissioner encompass ostering leadership in theAustralian Public Service (APS). A central responsibility o APS leaders is to ensure that soundgovernance policies and practices are embedded in their agencies.

Prominent examples in the media o private and public sector organisations losing their way haveshited governance into the spotlight. Achieving excellence in governance was identied as a key issue in my 2005–06 State o the Service Report .

Te challenge or public servants is understanding the ull responsibilities o good governance. Te Constitution, common law, specic public sector legislation, guidelines, conventions andagreements state the ‘must do’ elements o governance. A range o documents, such as Foundationso Governance published by my Commission and numerous publications by the Department o Finance and Administration and the Australian National Audit Oce, cover o the ‘musts’.

But there are other elements o good governance that are ‘should do’ elements. Building Better

Governance, while covering some o the ‘musts’, ocuses on providing guidance about the ‘shoulds’.

When I talked with public service senior executives about what guidance and advice would bemost helpul to them, the overwhelming preerence was or practical, directly relevant andcommon sense examples about what agencies were actually doing—in other words why, how and what worked.

Tese guidelines provide this. Part One articulates what we mean by governance in the publicsector and why good governance is important. Part wo outlines the building blocks ordeveloping better governance. However, these guidelines are rightly dominated by Part Tree

which consists o case studies provided by a range o agencies o varying size and complexity.

Tey illustrate a variety o systems, tools, approaches and cultures developed to meet the specicneeds o each agency.

Te case studies demonstrate two important things. Firstly, there is no ‘one size ts all’ approachto governance. While there are common elements, themes and models, agencies need to developsystems that meet their specic circumstances and be prepared to adapt and evolve theirgovernance arrangements to meet changing needs.

Secondly, governance can only work i it is part and parcel o the culture o the organisation—itneeds to be actively upheld and implemented by every person in the organisation. Everyone mustknow and act on their responsibilities.

I hope you enjoy reading about the experiences o agencies in the APS. Te online version o these guidelines will be re reshed rom time to time as new, interesting case studies emerge.

I would like to acknowledge the Department o Finance and Administration or its advice duringthe development o this publication and sta o all the agencies who gave their time in helping us

compile the case studies. We are very grateul to you all.

Lynelle Briggs

Australian Public Service Commissioner



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Contents

Commissioner’s Foreword ..................................................................................... iii

Part One—What is Public Sector Governance? .................................................... 1

Denition ..............................................................................................................................1

Governance Framework ........................................................................................................2

Why is it Important? .............................................................................................................2

Part Two—Building Blocks for Effective Governance ........................................... 5

1. Strong Leadership, Culture and Communication ..............................................................6

2. Appropriate Governance Committee Structures ...............................................................7

3. Clear Accountability Mechanisms ...................................................................................11

4. Working Eectively Across Organisational Boundaries ..................................................13

5. Comprehensive Risk Management, Compliance and Assurance Systems ......................15

6. Strategic Planning, Perormance Monitoring and Evaluation .........................................17

7. Flexible and Evolving Principles-based Systems .............................................................19

Part Three—Departmental Case Studies ............................................................. 21

Department o Human Services ..........................................................................................22

Department o Families, Community Services and Indigenous Aairs...............................26

Department o Foreign Aairs and rade ...........................................................................30

Department o Veterans’ Aairs ..........................................................................................34Department o Industry, ourism and Resources—case study one ......................................38

Department o Industry, ourism and Resources—case study two ......................................42

Department o Immigration and Citizenship......................................................................47

Department o ransport and Regional Services .................................................................51

Department o Education, Science and raining.................................................................54

Attorney-General’s Department ..........................................................................................59

Department o the Environment and Water Resources.......................................................64

Department o Employment and Workplace Relations ......................................................70Department o the reasury ................................................................................................73

Te Australian Agency or International Development (AusAID) .....................................76

Appendix A—ANAO ‘House of Public Sector Governance’ ................................ 83

Appendix B—Governance and Planning Model .................................................. 85

Appendix C—Examples of Internal Governance Structures ............................... 87



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Part One—What is Public Sector Governance?

DenitionPublic sector governance covers:

‘…the set o responsibilities and practices, policies and procedures, exercised by an agency’s

executive, to provide strategic direction, ensure objectives are achieved, manage risks and use

resources responsibly and with accountability.’ 1

It also encompasses the important role o leadership in ensuring that sound governance

practices are instilled throughout the organisation and the wider responsibility o all public

servants to apply governance practices and procedures in their day-to-day work.

Good governance is about both:

• performance—how an agency uses governance arrangements to contribute to its overall

perormance and the delivery o goods, services or programmes, and

• conformance—how an agency uses governance arrangements to ensure it meets the

requirements o the law, regulations, published standards and community expectations

o probity, accountability and openness.2

Tis means that, on a daily basis, governance is typically about the way public servants take

decisions and implement policies.

1 ANAO and Department o the Prime Minister and Cabinet, 2006, Implementation o Programme and Policy Initiatives: Making Implementation Matter, Better Practice Guide , Commonwealth o Australia, Canberra, p.13 <http://www.anao.gov.au/uploads/documents/Implementation_o_Programme_and_Policy_Initiatives.pd>

2 ANAO, 2003, Public Sector Governance, Volumes 1 & 2: Better Practice Guide , Commonwealth o Australia, Canberra, p. 6<http://www.anao.gov.au/uploads/documents/Public_Sector_Governance.zip>



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Governance Framework Te governance ramework is based on principles o public sector governance including:

• accountability —being answerable or decisions and having meaningul mechanisms

in place to ensure the agency adheres to all applicable standards• transparency/openness—having clear roles and responsibilities and clear procedures

or making decisions and exercising power

• integrity —acting impartially, ethically and in the interests o the agency, and not

misusing inormation acquired through a position o trust

• stewardship—using every opportunity to enhance the value o the public assets and

institutions that have been entrusted to care

• eciency —ensuring the best use o resources to urther the aims o the organisation,

with a commitment to evidence-based strategies or improvement

• leadership—achieving an agency-wide commitment to good governance throughleadership rom the top.3

Agencies need to have an approach to governance that enables them to deliver their

outcomes eectively and achieve high levels o perormance, in a manner consistent

with applicable legal and policy obligations. Tese general obligations are explored

in detail in Foundations o Governance in the Australian Public Service .4

Why is it Important?

‘Good governance is not an end in itsel. Te reason governance is important is that

good governance helps an organisation achieve its objectives. On the other hand,

poor governance can bring about the decline or even demise o an organisation.’ 5

Te Public Service Commissioner has identied achieving excellence in governance as

a key challenge or the Australian Public Service (APS).6 Quality governance processesare essential to the APS as they provide the ramework within which agencies can operateeectively. Tey also aect public condence in the APS’s capability and integrity, as well asits employees’ satisaction levels.

Ecient, eective and ethical governance is a major ocus or agencies, particularly in lighto the:

• changingnatureofthepublicsector,withitsgreaterfocusonwholeofgovernment,delivering outcomes with and through other sectors, and greater contestability o adviceand services

3 Ibid, Guidance Paper No.1, p.2

4 Australian Public Service Commission, 2005, Foundations o Governance in the Australian Public Service, Commonwealth

o Australia, Canberra. <http://www.apsc.gov.au/oundations/index.html>

5 CCH, 2004, Public Sector Governance—Australia, Sydney, p.10–101

6 Australian Public Service Commission, 2006, State o the Service Report 2005–06, Commonwealth o Australia, Canberra, p.6

<http://www.apsc.gov.au/stateotheservice/0506/report.pd>



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• Government’sresponsetotheUhrigReview 7, which has led to improved governanceor Australian Government bodies through greater consistency in organisational design,clearer expectations, greater clarity in communication through parallel reporting, and

better practice principles or governing bodies

• requirementsforChiefExecutiveOcerstocompleteacerticateofcompliance,covering their agency’s compliance with the nancial management ramework, strategies

or dealing with known risks, and any breaches and associated remedial strategies8

• implicationsofwell-publicisedorganisationalshortcomingsandtheirconsequences

(e.g. as outlined in the Palmer and Comrie reports about the ormer Department

o Immigration and Multicultural and Indigenous Aairs9 and the inquiry by

Commissioner Cole into the private sector body, the Australian Wheat Board10)

• movestoreduceinternallyimposedredtapeandimprovetheeectivenessofinternal

controls and regulation11

• needforbetterrecordkeepingaspartofimprovedaccountabilityandgovernancearrangements as refected in the Management Advisory Committee report on

recordkeeping12.

7 Uhrig,J.,2003,Review o the Corporate Governance o Statutory Authorities and Oce Holders, Report to the Prime Minister

andMinisterforFinanceandAdministration,June2003.<http://www.nance.gov.au/governancestructures/>

8 Department o Finance and Administration, 2006,Finance Circular No. 2006/08 Certifcate o Compliance—FMA Act Agencies

<http://www.nance.gov.au/nramework/docs/c_2006.08.rt >

9 Palmer, M., 2005, Inquiry into the Circumstances o the Immigration Detention o Cornelia Rau, Commonwealth o Australia,

Canberra.<http://www.minister.immi.gov.au/media/media-releases/2005/palmer-report.pd> and Comrie, N. 2005, Inquiry

into the Circumstances o the Vivian Alvarez Matter , Commonwealth o Australia, Canberra. <http://www.comb.gov.au/

commonwealth/publish.ns/AttachmentsByitle/reports_2005_03_dimia.pd/$FILE/alvarez_report03.pd>

10 Cole, ., 2006, Report o the Inquiry into Certain Australian Companies in Relation to the UN Oil-or-Food Programme ,

Commonwealth o Australia, Canberra <http://www.o.gov.au/agd/WWW/unoiloroodinquiry.ns/Page/Report>

11 Management Advisory Committee (MAC) Report, 2007,Reducing Red ape in the Australian Public Ser vice , Commonwealth

o Australia, Canberra. <http://www.apsc.gov.au/mac/redtape.htm>

12 Management Advisory Committee (MAC) Report, 2007, A Note or File: A Report on Recordkeeping in the Australian

Public Service , Commonwealth o Australia, Canberra. <http://www.apsc.gov.au/mac/noteorle.htm>



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Approaches or models or building better governance dier considerably depending on

agency size, complexity, structure and legislative background. Agencies striving or better

governance should constantly test and adapt their models to meet changing circumstances.

However, strong governance models are o little value i agencies do not encourage

employees to take responsibility or issues within their control and to actively deal

with matters as they arise.

It is also vital that agencies have well-established processes or monitoring all aspects o

their corporate health and or escalating issues o signicant risk, and that they do not sweep

bad news under the carpet, but ensure it is resolved by the right people at the right time.

A strong ocus on building and sustaining eective governance rameworks and on detecting

signs o poor governance or ailing corporate health can help agencies deal with problems

beore they develop into serious perormance issues.

While there is no ‘one size ts all’ approach, the case studies in Part Tree illustrate common

themes that are undamental to successully implementing better governance. Tese building

blocks reinorce the elements contained in the Australian National Audit Oce (ANAO)

‘house o public sector governance’ (see Appendix A). In particular, the building blocks

support the elements o leadership, ethics and perormance culture; stakeholder

relationships; risk management; planning and perormance monitoring; and review

and evaluation o governance arrangements.

Te basic building blocks that need to be considered when establishing or reviewing

governance arrangements are:

• strongleadership,cultureandcommunication

• appropriategovernancecommitteestructures

• clearaccountabilitymechanisms

Part Two—Building Blocks for Effective Governance



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• workingeectivelyacrossorganisationalboundaries

• comprehensiveriskmanagement,complianceandassurancesystems

• strategicplanning,performancemonitoringandevaluation

• exibleandevolvingprinciples-basedsystems.

1. Strong Leadership, Culture and CommunicationStrong commitment from the top that cascades across the agency

Strong leadership is critical. Te case studies highlight the importance o strong leadership

by heads o agencies and senior management. For example, several agencies cite the clear

direction and support o their Secretary as a crucial success actor. But success also depends

on the leadership o the senior executive as a whole. Senior managers must ‘walk the talk’—

modelling good governance behaviours and demonstrating a commitment to achieving

Government objectives through accountable processes.

Line managers also need to consistently and regularly send the same messages to reinorce

the organisation’s governance approaches. All employees must be encouraged to take their

governance responsibilities seriously, and be active participants in the agency’s governance

processes.

Employees are key players in the organisation. Tey are ‘on the ground’ and can see where

things need to change, what’s going wrong or who is doing the wrong thing.

‘Te ‘tone at the top’ strongly infuences virtually all elements o governance.’13

An ethical and values-based culture

Excellent leadership must be supported by a strong organisational culture. Clear and

ongoing communication about the agency’s governance requirements needs to be coupled

with strategies that encourage cultural change where required.

Agencies need to demonstrate to sta how governance systems help improve perormance

and achieve goals. It is also important that everyone understands the governance system and

their responsibilities or contributing to a sound governance culture.

As part o a sound ethical culture, sta should clearly understand their responsibilities under

the Public Service Act 1999 to abide by the APS Values and Code o Conduct. Agenciesshould also have well-understood procedures or dealing with problems or complaints raised

by citizens and sta, including whistleblowers’ reports. Procedures should ensure airness,

transparency, independence and appropriate recordkeeping.14

13 ANAO, 2003, Public Sector Governance, Volumes 1 & 2: Better Practice Guide , Commonwealth o Australia, Canberra, p. 15

<http://www.anao.gov.au/uploads/documents/Public_Sector_Governance.zip>

14 Australian Public Service Commission, 2001, Circular No 2001/4: Whistleblowers’ reports,

<http://www.apsc.gov.au/circulars/circular014.htm>



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‘Ethics is embedded in culture. Tose at a governance level can ensure an ethical culture

by modelling desired behaviours, discussing dicult ethical issues, and ensuring

consistency between any rules and actual behaviours.’15

Frequent and consistent communicationCommunication to all sta about their objectives and responsibilities must be ongoing,consistent and part o all senior management communication to sta including in everyday situations. Inormation can be made available through speeches, sta meetings, articles innewsletters and on the intranet, perormance appraisal discussions and regular discussionsabout policy and programme development. One way to ensure that a constant and consistentmessage is sent to all sta is to make a specic area o the agency responsible or

governance-related communication.

Employees’ responsibilitiesGood governance requires all employees to think careully about their decisions and actions,and to be interested and active players in their agency’s management and outcomes. It is notan ‘us and them’ situation with only executives and managers responsible or governancematters—everyone in the agency is responsible. Te quality o the agency’s governance relies

on each employee taking individual responsibility as well as a team eort.

Ongoing training and support for staff

It is essential to provide ongoing training and support or sta responsible or decision-making, programme implementation and nancial management. Te level o training and

support needs to be commensurate with the level o responsibility devolved to sta and thecomplexity and risk o the decision-making context. Otherwise it is dicult to ensurecompliance even with the best-designed governance model.

raining should also cover the APS Values and Code o Conduct. Tese dene the standardso behaviour required by APS sta and cover issues related to governance such asrecognising conficts o interest, maintaining condentiality, complying with the law and

agency directions, and reporting unlawul or unethical behaviour through proper channels.

‘Good governance is enacted through the behaviours and actions o sta at all levels as

they contribute to the ecient, eective and ethical delivery o their organisation’s goals.’16

2. Appropriate Governance Committee Structures

Factors inuencing committee structure

All agencies use committees to support the agency head in decision-making and governance

arrangements. Some committees are mandatory (such as those or audit and occupational

health and saety) while others are o an advisory nature only.

15 CCH, 2004, Public Sector Governance—Australia, Sydney, p. 40–101

16 ANAO, 2003, Public Sector Governance, Volumes 1 & 2: Better Practice Guide , Commonwealth o Australia, Canberra, p. 1




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Te appropriate committee structure or an agency depends on its size, the breadth anddiversity o its unctions, the complexity o its responsibilities, the nature o its business andits risk prole.

Where an agency is small, where sta are concentrated in one geographic location, and/or

where the range o unctions is reasonably narrow, communication o key issues across theorganisation may be relatively straightorward. Group managers or division heads may meetace-to-ace with the agency head (and their deputies) on a weekly or ortnightly basis toraise and deal with matters—requiring only a small number o committees across the agency.

Larger agencies, with a wider geographical spread and/or a greater diversity o unctions,typically have more detailed committee structures, including fexibility to deal withcomplicated (and oten urgent) matters that cut across several areas. Larger agencies may grapple with ensuring that many divisions with devolved responsibilities (and sometimes

with very dierent objectives, stakeholders and cultures) operate within a clear, cohesive andintegrated governance ramework. Te case studies include examples o agencies that allow

or high levels o devolution but within a structured and centrally controlled ramework.

Occasionally, the operation o committees can create conusion regarding accountability issues. A committee’s role should be to advise the agency head or chie governance team,and/or to undertake specic work or make decisions about specic issues. Committees canbuild agency expertise and share workloads. Tey should not assume ultimate decision-

making power, which is the responsibility o the agency head or chie governance team.

‘In establishing a committee, chie executives must remember that they cannot delegate

their ultimate responsibility or governance.’17

Typical committee structure

A airly typical committee structure in APS agencies includes:

• aseniorexecutivecommittee (agency head, deputies and sometimes chie nancial ocerand head o corporate services)

• aseniormanagementcommittee(broaderSESmembership)

• anauditcommitteeresponsibleforriskmanagement,theagency’scontrolframework,itsexternal accountability responsibilities, compliance with legislation, and its internal andexternal audit activities18

• aninformationandcommunicationstechnologycommittee

• apeoplemanagementcommitteetodeveloppoliciesandpracticestoattract,retainandmanage sta and their perormance

• anoccupationalhealthandsaety committee19

17 CCH, 2004, Public Sector Governance—Australia, Sydney, p. 80–000.

18 ANAO, 2005, Public Sector Audit Committees: Having the Right People is the Key, Better Practice Guide , Commonwealth

o Australia, Canberra. <http://www.anao.gov.au/director/publications/betterpracguides.cm?pageNumber=2>

19 Occupational Health and Saety Act 1991.

<http://www.comlaw.gov.au/comlaw/management.ns/lookupindexpagesbyid/IP200401538?OpenDocument>



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• aconsultativecommittee/workplacerelationscommitteetoseekstainputinto

administration and workplace issues.

Tere may also be requent and regular ormal meetings between the agency head and

deputies (or their equivalents) and division heads to identiy and manage ‘hot’ issues and

progress against objectives.

Appendix B depicts an example o a typical governance committee structure and its

interaction with the planning processes and day-to-day operation o the agency.

Additional committee structures

In addition to the typical committee structure, agencies examined in the case studies had

implemented a range o other oversight or coordinating committees, many o which were

sub-committees o the senior executive committee. Matters overseen by such additional

committees include:

• ethics,valuesandstandards

• security,includingbusinesscontinuity

• remuneration

• research

• programmemanagement

• fraudandintegrity

• accommodation

• performancemanagement

• strategicplanning.

In some cases, these committees are established to implement specic Government

initiatives or complex work cutting across the agency. In other cases, they are ormed

to oversee programmes or policy areas identied as key risks. Tese committees are oten

time-limited.

It is possible or agencies to appoint external members to their committees to provide

a broader perspective. Te ANAO suggests that appointing external members to audit

committees is an eective way o strengthening the committee’s actual and perceived

independence.20

Appendix C provides examples o the internal governance committee structures o some

o the case study agencies.





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Establishing effective committees

Regardless o the committee structure, these best practice protocols should be ollowed when

establishing and operating committees:

• establishcleartermsofreference/chartersincludingthepurposeandroleofthe

committee, the responsibilities o its members, and its accountability to (or degree

o independence rom) the agency head

• selecttherightmembersforthetask—whetherrepresentativeorrelatedtoexpertise

• equipcommitteememberswiththeskillsandresourcestheyneedtoplayanactiverole

in committee deliberations

• provideappropriateandskilledsecretariatsupportwiththebackingofsenior

management

• ensurebriengpapersaresentoutinatimelymannersothatallmembershavethe

opportunity to consider them thoroughly • developsoundrecordkeepingandreportingprotocols

• reviewcommitteeperformanceandappropriatenessonaregularbasis,particularlywhen

the unctions o the organisation change, to ensure that the number o committees and

the workload they create or sta remains reasonable and appropriate

• ensurecommitteesareandremainstrategicallyfocused,alignedandintegrated—

developing a work plan or the year ahead can assist with this

• determinewhethercommitteesareongoingortime/purposelimited.

‘Condence in a committee will be enhanced i it has clear and transparent governancearrangements. A regular schedule o meetings, with prearranged dates and written

agendas, papers and minutes, as well as a list o actions decided at each meeting, is

important. It ollows that sta support, including a condential secretary, should be

available. It may also be necessary or the chie executive to arrange or a committee

such as an audit committee to be able to seek external proessional advice when needed.’21

Te review o Department o Deence management released in early 200722 provides some

commonsense advice about committees and how to use them most eectively. Although the

advice is specically directed to Deence, it is generally relevant to all agencies, particularly large organisations.

Te review notes that the committee system plays a major role in binding together a large

and diverse organisation. Te review recommends that the guiding principle or committees

is to establish and retain only those that contribute to the eective and ecient running

o the organisation, and also reduce the pressure and workload on senior sta.

21 CCH, 2004, Public Sector Governance—Australia, Sydney, p. 80–110.

22 Proust,E.,Ritchie,C.,Kallir,A.,Azarias,J.,2007,Report o the Deence Management Review, Commonwealth o Australia,

Canberra. <www.deence.gov.au/dmr>



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Each committee must have a clear purpose and a clear sense o its strategic obligations. Te core questions agencies should ask themselves include:

• Doesthiscommitteeenhancetheagency’sstrategicfocus?

• Isitthebestuseofseniorpeople’stime?

• Couldtheseoutcomesbeachievedinanotherway?

Te review recommends that, while the agency head is the ultimate decision-maker,a top executive committee should set the strategic direction o the agency, advise onsignicant management and investment decisions, and monitor nancial perormanceand compliance standards.

Te review considered that core sub-committees in the Deence context included audit,people management, OH&S and risk management committees. It strongly recommendedthat committees established or specic purposes or projects should have a sunset clause at

which time their existence should be reconsidered.

Te review also recommended that rather than seeking representational membership,committees limit membership to those who are essential to reaching inormed decisions.Others can be invited to participate on an ‘as needed’ basis. O course, membership dependson the committee’s role and purpose. For example, i a critical role is to ensure a consistent

approach is taken across the agency, representational membership may be appropriate.

3. Clear Accountability Mechanisms

Organisational structure

Clear and unambiguous lines o reporting, accountability and responsibility, both within

the organisation and with its stakeholders, are critical to eective governance. Several o thecase study agencies had recently reviewed and realigned their organisational structure to

achieve this.

InitsresponsetotheUhrigReview,theGovernmentagreedtoacentralareaprovidingadvice

on appropriate governance and legislative structures when establishing or reviewing statutory

authorities. In this context, the Department o Finance and Administration published whole

o government guidance entitled Governance Arrangements or Australian Government Bodies23

in August 2005, to provide a solid platorm or inormed discussion on governance.

Some agencies have established a particular branch or unit charged with the overall strategic

governance o the organisation. Responsibilities o such areas commonly include:

• providingsecretariatsupporttotheseniorexecutivecommittee

• drivingoroverseeingriskmanagementprocessesacrosstheagency,followingupon

perceived risks and alerting senior management to these

• monitoringandreportingonkeyactivities

23 Department o Finance and Administration, 2005,Governance Arrangements or Australian Government Bodies,

Financial Management Reerence Material No. 2, Commonwealth o Australia, Canberra. p.v

< http://www.nance.gov.au/nramework/governance.html>



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• coordinatingannualandnancialreports

• developingastrategicframeworkforoverallongoingassessmentandreviewofhowthe

agency is perorming

• supportingorganisationaldevelopment(inconjunctionwiththehumanresourcesarea).

‘…the importance o a good governance ramework is that it helps bodies to implement

government policies, deliver services well, meet their organisational goals and achieve

sustainable outcomes.’24

Managing the relationship with the Minister

A key governance process is the agency’s relationship and communication with the Minister

and his or her advisers. Te Australian Public Service Commission provides examples o good practice protocols or dealing with Ministers in Appendix 3 o Supporting Ministers,Upholding the Values: A Good Practice Guide 25. For example, one department issued GeneralPrinciples or the Preparation o High Quality Advice to Ministers, and another departmentprepared documentation setting out the regular meetings that occur between agency ocials

and the Minister, and how these work.

‘Managing the relationship with the responsible Minister, and through him or her with

the government as a whole, is a critical element o public sector governance.’26

Relationships with portfolio entities

Te accountability relationship between the Minister, the head o the portolio and agency heads is particularly important. Te exact nature o that relationship is generally denedby the legislative ramework surrounding the establishment and operation o the portolioentities, but within any ramework sound communication plays a central role.

Inhisreviewofstatutoryauthoritiesandoceholders,JohnUhrigidentiedanumber o actors causing ineective governance in some authorities, including ‘unclear boundariesin their delegation, a lack o clarity in their relationships with Ministers and portoliodepartments, and a lack o accountability or the exercise o their power’. Te review suggeststhat such problems oten arise due to a ‘hands-o ’ approach assumed by many when dealing

with statutory authorities.27

Clearly articulated responsibilities and lines o reporting are required, along with

communication through both ormal and inormal mechanisms. Written protocols can assist

by detailing the processes or identiying high risk problems and notiying the departmental

Secretary and Minister o pertinent issues.

24 Ibid, p.v

25 Australian Public Service Commission, 2006, Supporting Ministers, Upholding the Values: A Good Practice Guide , Commonwealtho Australia, Canberra. <http://www.apsc.gov.au/publications06/supportingministers.htm>

26 CCH, 2004, Public Sector Governance—Australia, Sydney, p 10–030

27 Uhrig,J.,2003,Review o the Corporate Governance o Statutory Authorities and Oce Holders, Commonwealth o Australia,

Canberra, p. 5 <http://www.nance.gov.au/governancestructures/docs/Te_Uhrig_Report_July_2003.pdf>



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4. Working Effectively Across Organisational Boundaries

Relationships with external stakeholders

APS agencies are accountable to the general public through the Parliament as well as to the

Government. Te success o relationships that agencies develop with stakeholders, includingthe public, is aected by the agency’s reputation o integrity, openness and accountability.

On a practical level, stakeholders need to trust that decisions aecting them are made

consistently and openly, and that they will be dealt with in a consistent way by all parts

o the agency.

Agencies need to ensure that they can explain and deend their decision-making and

that they have clear procedures or dealing consistently and equitably with stakeholders.

Agencies can develop organisation-wide protocols and checklists or dealing with external

stakeholders. Protocols may include service standards or charters, and systems or

monitoring complaints and identiying systemic issues. Regular stakeholder surveys

can measure satisaction levels.

‘Relationships with stakeholders need to be refected ormally in governance structures

to provide adequate communication fows and manage possible conficts o interest’.28

Whole of government approaches

Te governance implications o whole o government approaches centre on the need toknow ‘who is responsible or what; whether there is a common goal or whether agencies

have discrete responsibilities; and which agency provides the leadership’.29

According to the Auditor-General or Australia, challenges in whole o governmentarrangements may include a lack o clear leadership; blurred lines o accountability;diculties in measuring overall eectiveness and impact; and transitional costs and somelevel o duplication in ongoing administrative costs.30

Whole o government approaches require management and coordination o governance,particularly accountability arrangements, across a range o boundaries, especially agency boundaries and sometimes state or local government sectors.

AgenciesshoulddevelopwrittenprotocolsorMemorandaofUnderstandingtodocumenttheresponsibilitiesofthevariousparties.Usefulguidanceaboutconsultationandaccountability arrangements can be ound in the document Working ogether producedby the Management Advisory Committee.31

28 ANAO, 2003, Public Sector Governance, Volumes 1 & 2: Better Practice Guid e, Commonwealth o Australia, Canberra, p. 17<http://www.anao.gov.au/uploads/documents/Public_Sector_Governance.zip>

29 McPhee, Ian, Auditor-General or Australia, 2007, Governance: the ANAO’s Contribution to Making it Happen, speech deliveredto the Queensland Regional Heads Forum, 18 May 2007.

30 Ibid.

31 Management Advisory Committee, 2005,Working ogether: Principles and Practices to Guide the Australian Public Service ,Commonwealth Government, Australia, <http://www.apsc.gov.au/mac/workingguide.htm>



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Tere is a need or careul choice o the appropriate structures to support whole o government work, and these are discussed in the Management Advisory Committee reporton Connecting Government 13

32. Structures and processes must be matched to the task—no onesize ts all. For example, i there is deep contention between portolios, or in the community,and tight timerames are involved, a dedicated taskorce under strong leadership and

working directly to the Prime Minister, a senior Minister or a Cabinet committee may produce better outcomes than a more standard interdepartmental committee.

Cross-portolio work can particularly challenge the budgeting and accountability ramework. Te Department o Finance and Administration should be consulted at an early stage in thedevelopment o major cross-portolio initiatives to ensure that the fexibility that is possiblein the existing outcomes and outputs budget ramework is maximised and used to acilitatea cross-portolio approach.

‘Business and the wider community reasonably expects that government programmes

and services will be delivered, increasingly, in a seamless way; and this includes cross-government or jurisdictional boundaries.’33

Devolved governance arrangements

Agencies increasingly deliver services with and through non-government bodies ornetworked government arrangements with the states and territories. While the actual servicedelivery may be outsourced, accountability and risk management cannot be outsourced—ultimate responsibility lies with the APS agency concerned.

Eective, responsive and sustainable devolved governance requires agencies to developstrong accountability rameworks that emphasise the importance o standards whichcan be contractual and/or set through service charters and other governance arrangements.

Te standards are enorced through administrative review and perormance managementregimes.

At an operational level, agencies involved in such arrangements have devised andimplemented a number o control mechanisms to assist them to meet their ownaccountability requirements as well as the Government’s accountability to service users andthe general community. Broadly, these control mechanisms are intended to leave the providerree to manage the delivery process but still be accountable to public servants or speciedoutputs and or meeting targets or indicators. Te APS, in turn, is accountable or setting

and monitoring these indicators, and should build evaluation and review into contractsand regulations to ensure accountability rameworks are rigorous.

It is important, however, that perormance measures, especially lower level indicators,are set in such a way that they do not undermine the responsiveness o more complexdevolved governance arrangements. Tere is a danger that excessive direction and compliancecan stife innovation and fexibility. A balance needs to be struck between proper levels

32 Management Advisory Committee, 2004,Connecting Government: Whole o Government Responses to Australia’s Priority

Challenges, Commonwealth Government, Australia, <http://www.apsc.gov.au/mac/index.html>

33 McPhee, Ian, Auditor-General or Australia, 2007, Governance: the ANAO’s Contribution to Making it Happen, speech delivered

to the Queensland Regional Heads Forum, 18 May 2007



15

o accountability and allowing third-party providers some measure o fexibility and

responsiveness to their clients. Tere is no one appropriate governance arrangement, but

rather a spectrum o control possibilities, against which agencies will need to develop the

arrangements that are particular to their situation. A ocus on genuine outcomes rather than

narrow targets, however, is likely to be appropriate.

5. Comprehensive Risk Management, Complianceand Assurance Systems

Comprehensive and exible systems

Agencies should recognise the importance o having fexible compliance, decision-making

and risk management systems to allow or changes in leadership, objectives, direction,

resources and risk. Without inbuilt fexibility, there is the possibility that agencies may

simply use a ‘tick-box’ approach which could encourage complacency ollowed by major

problems.

‘Strong, transparent and well communicated governance mechanisms like risk and raud

plans, business or budget committees, audit committees, and structured HR mechanisms,

together with an emphasis on integrity and ethics, combine to orm the cement which

binds together the other characteristics needed or organisational condence.’ 34

Risk management

Risk management underpins any agency’s approach to achieving its objectives. An important

responsibility o any Government body is the eective and ecient use o Commonwealth

resources. Tis aim can be aided by sound risk management practices. o increase the

likelihood o achieving desired outcomes, inormed decisions should be made based on

evaluation o the associated risks.

All agencies need to establish and implement sound systems or risk oversight and

management and internal control, and these systems should be integrated into the business

planning process. Systems should be designed to identiy, assess, monitor and manage risk

throughout the agency. Tey also need to provide mechanisms or sta to report risks to

senior management.

Agencies examined in the case studies incorporated risk management as a key component

o good governance.

While the risk management system should be comprehensive—and the recordkeeping

system appropriately detailed—regular, concise reports on how the agency is tracking

in key risk areas should also be provided to the agency ’s senior executive. Some agencies

have adopted a one-page reporting ormat, with urther detail available i required.

34 Stanton, M. 2007, Building Confdent Organisations: Looking Forward, Looking Back, in Public Administration oday, Issue 11:

April–June2007,InstituteofPublicAdministrationAustralia,p.15



16

‘Risk management should not be an annual ‘set and orget’ exercise. A well-governed

organisation regularly revisits its risks, measures the occurrence o any events identied

as contributing to risks, and has in place strategies or risk mitigation.’35

Audit committees

UndertheFinancial Management and Accountability Act 1997 (FMA Act) and theCommonwealth Authorities and Companies Act 1997 (CAC Act), each agency must establishan audit committee to independently review and consider its operations and competence as

well as the integrity o its accounts.

Audit committees are an important tool or identiying and monitoring risks to the agency.Generally they are responsible or overseeing an agency’s risk management and internalcontrol ramework, its external accountability and other legislative complianceresponsibilities.

Detailed guidance on establishing and operating public sector audit committees is available

in the ANAO better practice guide Public Sector Audit Committees.36

‘An Audit Committee plays a pivotal role in the governance ramework o organisations

in both the public and private sectors.’37

Compliance and decision-making tools

Agencies can introduce a range o tools and systems to enhance their compliance anddecision-making processes. Tese include written guidelines and protocols, checklists, and

help and advice rom corporate areas. Several agencies examined in the case studies haddeveloped organisation-wide written protocols or dealing with issues such as nancialmanagement, procurement and programme management.

Chie Executive’s Instructions (CEIs) are a particularly useul tool to ensure that theagency’s nancial accountability and governance arrangements are aligned to its operationaland legal needs. Tey oten orm the core o agencies’ accountability requirements. TeManagement Advisory Committee’s review o red tape in the APS38 highlights theimportance o reviewing and simpliying CEIs to ensure they are readily understood andadopted throughout the agency.

Documenting protocols and procedures can be particularly important even when agencieshave long-standing, highly experienced sta. Teir knowledge can be taken or granted and,as a result, knowledge transer and recording o procedures can be neglected. Detailed

documentation o procedures is equally important where there is high sta turnover.

35 CCH, 2004, Public Sector Governance—Australia, Sydney, p. 110–080



37 Ibid.

38 Management Advisory Committee (MAC) Report, 2007,Reducing Red ape in the Australian Public Service , Commonwealth

o Australia, Canberra. <http://www.apsc.gov.au/mac/redtape.htm>



17

‘Good recordkeeping is also essential to accountability. All signicant decisions or actions

need to be documented to a standard that would withstand independent scrutiny. Proper

recordkeeping allows others to understand the reasons why a decision was made or an

action taken and can guide uture decision-makers.’39

6. Strategic Planning, Performance Monitoring and Evaluation

Planning and review mechanisms

Strategic planning and perormance monitoring, reviews and evaluations are all essential

tools or ensuring agencies regularly ‘reality check’ their governance systems and identiy

potential risks that could aect their ability to achieve outcomes.

An agency’s characteristics—its budget, sta, culture, objectives and environment—may

change over time, even without signicant events such as changes o policy or Government.

Agencies must have systems in place which allow changing needs and circumstances to be

identied quickly; current systems to be assessed against their ability to meet new needs;

and new approaches to be investigated and implemented as necessary.

Strategic planning

As part o normal business practice, agencies generally develop a business plan each year.

Agencies should have an integrated ramework or business planning which cascades rom

strategic priorities to divisional priorities and activities.

Tese goals are then distilled into individual perormance and development plans. Tis

allows every employee to see exactly how their individual work aects their team goals, their

division’s goals and their agency’s goals. It also shows how working towards these goals helps

achieve the agency’s overall priorities.40

Performance monitoring and evaluation

Agencies should have systems in place that allow ongoing monitoring o perormance. Tis includes internal audits and reviews o processes to ensure accurate inormation andquality assurance against agreed perormance measures.

Perormance measures should cover the eective and ecient delivery o Government

policy and programme objectives as well as the internal management o the agency.Detailed guidance can be ound in the Department o Finance and Administrationdocument Perormance Reporting Under Outcomes and Outputs.41

39 Australian Public Service Commission, 2003, APS Values and Code o Conduct in Practice: A Guide to Ocial Conduct or APS

Employees and Agency Heads, Commonwealth o Australia, Canberra.<http://www.apsc.gov.au/values/conductguidelines.htm>

40 Murphy,J.,2007,Undertaking a Governance Review, paper to the Ethical Leadership and Governance in the Public SectorConerence, May 10 2007, Canberra.

41 Department o Finance and Administration, 2003,Perormance Reporting Under Outcomes and Outputs, Commonwealtho Australia, Canberra. <http://www.nance.gov.au/budgetgroup/Commonwealth_Budget_-_Overview/perormance_

reporting.html>



18

An agency’s monitoring and evaluation plan should be a rolling schedule which supportsregular reviews o programmes and policies to inorm uture unding requirements.

Programmes, procedures and policy—including operational policy—should also be regularly reviewed to gauge their eectiveness in delivering desired outcomes, and to ensure that they

are operating eciently. Tey should also be examined or appropriateness—the extent to which the programme/policy objectives align with Government priorities. Te monitoringand evaluation ramework should also integrate risk management, resource allocation and

perormance reporting.42

Agency health

Processes or monitoring corporate health need to be an integral part o an agency’s

governance ramework. Assessing corporate health goes beyond measuring the current

eectiveness o the agency in meeting its agreed perormance measures. Corporate health

covers all aspects o an agency’s governance. It includes issues such as how an organisation

is managed, its corporate and other structures, its culture, its policies and strategies, and

the way it deals with its various stakeholders. Monitoring the health o an agency allows

agencies to ‘take the pulse’ o their organisation, and to identiy early warning signs that

they may be at risk o poor perormance.

Six broad areas o corporate health are central to the early identication o agencies at risk

o poor perormance. Tese areas cover the broad spectrum o governance issues and include

organisational direction, leadership, organisational capability, corporate governance processes,

relationships and integrity, and organisational culture. Tere are also some issues that are

specic to the public sector.

Against each o these areas there are key indicators o corporate health associated with

organisations that perorm well, and with agencies at risk o poor perormance. For example,

in an agency with high levels o corporate health, there is likely to be an awareness o, and

ocus on, core business throughout the organisation. Conversely, in an agency at risk o poor

perormance, there may be poor communication o organisational purpose, strategies and

vision.

Te Commission’s publication Agency Health—Monitoring Agency Health and Improving

Perormance 43 deals with these issues in more detail and provides a checklist to acilitate

agency discussions on corporate health. Te checklist provides a detailed list o corporatehealth indicators associated with organisations that perorm well, and those associated

with agencies at risk o poor perormance. It also provides ideas or how agencies can assess

their corporate health.

42 Murphy,J.,2007,Undertaking a Governance Review, paper to the Ethical Leadership and Governance in the Public SectorConerence, May 10 2007, Canberra.

43 Australian Public Service Commission, 2007, Agency Health—Monitoring Agency Health and Improving Perormance ,<http://www.apsc.gov.au>



19

7. Flexible and Evolving Principles-based Systems

Principles-based rather than rule-driven

Rules are necessary, but an organisation that is strictly bound by rules may not be able to

respond appropriately to unusual, complex or new circumstances. An understanding o thepolicies and objectives behind the rules allows sound decision making rather than decisionmaking by a ‘tick-box’ approach alone.

Te case studies highlight the potential benets o a stronger ocus on a principles-basedapproach, leading to greater fexibility and responsiveness to Government needs. Tis alsoincreases senior management’s ability to apply a broader, uture-oriented strategic approach,

including to whole o government issues.

Tackling wicked problems

Te need or a fexible approach to traditional governance arrangements is most clearly highlighted in dealing with what are sometimes called ‘wicked’ policy problems. Teseproblems share a range o characteristics—they go beyond the capacity o any oneorganisation to understand and respond, and there is oten disagreement about the causeso the problems and about the best way to tackle them.

Very oten, part o the solution to wicked problems involves achieving sustained behaviouralchange by some groups o citizens or by all citizens. Tere are numerous examples includingdealing with obesity, climate change, Indigenous disadvantage or land degradation. For theseproblems, a traditional approach to governance which attempts to clearly identiy specicoutcomes and outputs, implementation plans and perormance targets may lead to these

types o wicked problems being handled too narrowly or the emergence o unintendedconsequences.

For wicked problems to be handled successully, governance structures need to supportholistic approaches, ocus accountability on the whole o government outcomes theGovernment is seeking, and allow or the engagement o stakeholders and citizens.Perormance measurement and evaluation needs to avoid a narrow ‘bean counting’ approachto whether the government’s objectives are being met, and take into account the likely need or longer time rames or results to become apparent.

Tere are no easy answers as to what the best governance arrangements or dealing with wicked problems are. It is important or agencies to look or a balance between achievingnecessary levels o accountability and ensuring that governance arrangements do not stifefexibility, innovation and collaboration. Te Commission’s ackling Wicked Problems—

A Public Policy Perspective 44 publication also deals with these issues.

‘ravelling the road o good corporate governance won’t guarantee success, but not

travelling upon it will almost certainly guarantee ailure.’45

44 Australian Public Service Commission, 2007, ackling Wicked Problems—A Public Policy Perspective , <http://www.apsc.gov.au>

45 Abetz, Senator Te Hon Eric, 2003, Te Role o Corporate Governance in Improving ransparency and Accountability in the Public

Sector , p.8



21

Part Three—Departmental Case Studies

In late 2006, the Australian Public Service Commission and the Department o Finance and

Administration held consultations with all APS departments to seek their views on

governance in the public sector. It was agreed that it would be useul to provide agencies

with a ‘road map’ o governance reerences and inormation. It was also elt that it would be

particularly valuable or agencies to share stories about their own governance experiences,

as a way or others to gain useul insights and ideas that they may implement.

Te range o issues covered in the case studies is broad:

• howtoorganisenancialandstangarrangements

• discussionsofvariousinternalgovernancecommitteestructures

• waysofcommunicatinggovernancemessages

• managingrelationshipswithexternalstakeholdersandportfolioentities

• implementingchange.

Te case studies highlight the point that, while approaches to governance issues vary or

dierent issues may dominate, there are several important common themes. Tat’s why it isimportant to ocus on the building blocks to good governance in Part wo o this document.

Over time, the aim is to add urther case studies to show the ways in which dierent

agencies approach the practical implementation o good governance.



22

Department of Human Services

Howchangesingovernancebroughttogetherarangeofdisparateservicedeliveryagenciesintoaholisticservicedeliverysystemwhichisresponsiveandaccountableto

boththeGovernmentandthepublic.

The department

Te Department o Human Services (DHS) was established in 2004 to improve the

development and delivery o Australian Government social and health-related services to

the community. Te department is responsible or ensuring the Government is able to get

the best value or money in service delivery while emphasising continuous improvement and

a whole o government approach.

Te department’s role is to direct, coordinate and broker improvements to service delivery

by the six Human Services service delivery agencies: Centrelink; Medicare Australia; ChildSupport Agency; CRS Australia; Australian Hearing; and Health Services Australia.

Te department employs approximately 240 sta and more than 37 000 are employed in the

Human Services portolio.

The challenge

Te department works to ensure that the portolio service delivery agencies are responsive

to the Government and provide services to the public as part o a holistic and integrated

ramework. Te Human Services portolio has an operating budget o around $4 billion

a year but delivers benets to citizens o around $100 billion a year.

Implementing the new arrangements was a huge challenge. Each o the service delivery

agencies had over time developed their own operating systems, culture and objectives. Not only

did administrative procedures have to change but the culture required an overhaul as well.

Some agencies, such as those that had operated under the governance o boards, did not have

experience in delivering whole o government objectives and had not been required to be

responsive directly to a Minister in their day-to-day operations. Some agencies were also

looking to make improvements, or example to provide more consistent services with shorter

waiting times.

The system

eHumanServicesportfoliowascreatedpartlyinresponsetotheUhrigreviewof

corporate governance o statutory authorities and oce holders. Several service delivery

agencies were moved under the new portolio. Tese service delivery agencies included some

that operated under the Public Service Act 1999 and Financial Management and Accountability

Act 1997 and were previously parts o other departments, some that operated under the

Commonwealth Authorities and Companies Act 1997 as agencies within a broader portolio,

and some that operated as Government Business Enterprises relatively independently.



23

Te heads o our o the service delivery agencies (Medicare Australia, Centrelink, Health

Services Australia and Australian Hearing) now report directly to the Minister through the

Secretary o DHS. Te other two service delivery agencies, Child Support Agency and CRS

Australia, are legally part o DHS and thereore report to the Secretary.

Prior to the creation o the department, two o the larger agencies (Centrelink and theormer Health Insurance Commission, now Medicare Australia) were accountable to boards.

Te portolio’s governance structure and operating systems are based on strong leadership

on the basis o government objectives and requent monitoring o perormance against

these objectives.

What was done

Change needed to be driven strongly across the portolio, with leadership and an overarching

ramework provided by the portolio department.

Regular meetings are held between the Minister, the Secretary and agency heads

(including the General Managers o the Child Support Agency and CRS Australia)

ocusing on monitoring previously agreed key perormance indicators, discussing the

strategic directions o the portolio and identiying any potential problems and what

will be done to address them.

Similarly, agency heads meet bi-monthly or more requently to discuss and resolve matters

relating to all agencies in the Human Services portolio. Tis meeting is chaired by the

Secretary. Agency heads provide monthly reports on perormance, including their nancial,

broader resource and service delivery objectives.An ‘escalation system’ was established to help identiy potential high-risk problems early and

escalate them to higher levels o management or resolution beore they get out o hand. For

example, this escalation system has been applied to Centrelink’s computer system which can

potentially impact on hundreds o thousands o citizens.

Te department also ocused on improving client service across the portolio. A range o

initiatives was implemented including expansion and enhancement o services, improved

technology, simpler orms, and eective client service collaboration between agencies. An

example o this is the myaccount project, which uses technology to save time and eort

or customers and which involved considerable work across Human Services agencies underthe governance o the core department.

Te ocus on whole o government issues and improvement in provision o services

prompted the development o the department’s myaccount website where members o the

public can sign-on to their Child Support Agency, Centrelink and Medicare accounts with

a single username and password, providing greatly improved client service.



24

Monitoring

Te department’s governance model, which includes requent and high-level lines

o reporting, accountability and transparency, ensures that problems are identied

and addressed early.

Te department receives monthly reports rom each o the Human Services agencies,

outlining operational and nancial perormance against pre-determined goals and objectives.

All budget measures that are undertaken by the portolio agencies are monitored by the

department. As an example, the department and the Child Support Agency have worked

closely with the Department o Families, Community Services and Indigenous Aairs and

Centrelink in successully implementing Stages 1 and 2 o the Child Support Scheme

reorms that were announced in February 2006. Some o the changes implemented in Stages

1 and 2 included increasing minimum child support payments, reducing the income cap

on high income earners, and customers having access to an external review mechanism o

Child Support Agency decisions through the Social Security Appeals ribunal. Te coredepartment is continuing to work closely with these agencies to implement the nal and

mostcomplexstageofthereformsby1July2008whichaimstomorefairlysharethecost

o raising children between parents.

Te department and the Child Support Agency are also working closely to implement the

Building a Better CSA package o reorms announced in February 2006. Tese reorms will

improve the experience that a parent has when dealing with the Child Support Agency.

Te monthly reports are thoroughly analysed in preparation or a governance meeting held

between the Secretary and each o the portolio agency heads. Service delivery is reviewedand discussed at these governance meetings.

Similarly, the nancial perormance and position o the Human Services agencies are

regularly analysed, providing important input to the governance meetings.

Benets

Te establishment o the new department and the co-ordinated arrangements or the new

Human Services portolio have ensured greater responsiveness to the Government and

better integrated, consistent and more timely services or citizens.

Te department has achieved economies o scale as well as clearer accountabilities by identiying and implementing more eective and ecient approaches across the portolio

as a whole as well as in all its separate parts.



25

Key messages

1. Strong and clear leadership is central to successully bring together disparate

services. Establishing good working relationships with portolio agency heads

is also essential.

2. When attempting to achieve widespread cultural change, including consolidation

o very dierent entities, change needs to be clearly dened and decisively

managed so that there is absolute clarity regarding expectations.

3. It is essential to have documented and well-understood protocols to quickly

and precisely escalate notication o high-risk problems or potential problems,

rather than waiting or a problem to arise beore determining the processes that

need to occur.



26

Department of Families, Community Servicesand Indigenous Affairs

Howalargedepartment(withamulti-billiondollarbudgetimpactingonallAustralians)

dealtwithcultural,governanceandmachineryofgovernmentissuesthroughcommitted leadershipandcommunication,soundaccountabilityandreportingregimes,strong

compliancesystemsandarticulationofclearobjectivesandpriorities.

The department

Te Department o Families, Community Services and Indigenous Aairs (FaCSIA) is the

Australian Government’s principal source o advice on social policy and is responsible or

about a quarter o the Government’s budgetary outlays. FaCSIA works in partnership with

other Government and non-government organisations in the management o a diverse range

o programmes and services designed to support and improve the lives o Australians.

Te department employs approximately 3 000 people, located in its national oce and

each state and territory, including rural and regional areas.

The challenge

FaCSIA has undergone two signicant machinery o government changes in recent years.

In 2004, some Department o Families and Community Services (FaCS) unctions were

moved to the Department o Employment and Workplace Relations and the Department

o Human Services, but the department gained parts o other agencies including the Oce

o the Status o Women and the Aboriginal and orres Strait Islander Commission. In 2006,the department needed to deal with bigger changes when the Indigenous unctions o the

ormer Department o Immigration and Multicultural and Indigenous Aairs moved to

FaCS, creating FaCSIA.

In the past the department’s various divisions or Groups operated as silos. Each Group

approached nancial management, project management, stakeholder relations etc. in

a dierent way. Corporate unctions were spread across the department. Te machinery

o government changes in 2004 emphasised the inadequacies o the existing structure and

processes, and the risks they posed.

Te Secretary decided that this situation had to change by shiting both the corporate/nancial governance o the organisation, as well as the culture, to a ‘One FaCS’ (now

‘One FaCSIA’) approach.

The system

FaCSIA now operates with three Groups (Corporate Support, Business and Financial

Services, and Inormation Management and echnology) responsible or all corporate

unctions. Tis includes a Chie Financial Ocer, Chie Inormation Ocer and a

dedicated Corporate Strategy Branch. Although all SES are still accountable or their own

areas o responsibility, the Corporate Strategy Branch drives and acilitates good governance



27

across the whole department by strengthening the implementation, management and

monitoring o, and reporting on, a range o corporate responsibilities.

Tis includes acilitating the implementation o the FaCSIA Strategic Framework 2006–09,

Core Business Processes, risk management, business planning and continuity, project

management, and coordination o project status reports and other cross-department reports.

Core Business Processes are being promoted to ensure that all areas o the department use

the same systems and approaches or their work in policy development and advice;

programme design and implementation; stakeholder management; issues management;

governance and resource management; and whole o government participation and

leadership. Core Business Processes ensure that this work is carried out in a consistent and

streamlined way across the department, based on best practice already in place. ools and

resources have been developed to help sta apply Core Business Processes in their work.

What was done Te change was initiated at the highest level—by the Secretary. He recognised problems

caused by the segmentation o the department and asked one o the Group Managers to

drive the change agenda. Te Group Manager was not involved in corporate responsibilities

but had a strong interest and motivation or change (note that in FaCSIA, Group Managers

are SES Band 2).

Tis led to both structural changes to the department, to ensure appropriate governance and

accountability systems, as well as cultural/behavioural change strategies to align sta with

the new systems.

Changes included:

• mergingallthecorporateresponsibilitiesintoonegroup,includingaChiefFinancial

Ocer (CFO), and appointing a Group Manager or Corporate who then took

responsibility or the change agenda

• establishingclearaccountabilityprocessesthathadtobeimplementedconsistently

by all sta in all areas o the department

• developingguidanceandtrainingmaterialstosupportthis

• creatingaCorporateStrategyBranchtoassistallmanagersmeettheirgovernanceresponsibilities and ensuring consistency across the department.

Because o the high risks FaCSIA carries in both nancial terms and in service delivery—

both very prominent in the public eye—the department went with a more directive

compliance approach to ensure it met its immediate governance and accountability

obligations. FaCSIA understood that changes in culture and behaviour happen more

gradually, and could not aord to wait or this change to happen through a purely

cooperative and collaborative approach.



28

Te department’s compliance systems were, however, strongly backed up by cultural change

strategies. Te key behavioural/cultural change strategy was to go back to basics to clariy:

what is the department’s purpose, what are the top priorities, what are the key

responsibilities, what are the core values?

External consultants were engaged to acilitate a wide-ranging consultation process withsta, key stakeholders (including the Minister) and the public. A travelling road-show and

ocus groups engaged people in the process, identied commonalities and spread the word

about the ‘One FaCSIA’ approach.

Te resulting core values, priority business results and responsibilities are printed on

a business-sized card which all sta can carry with them or reerence or to hand out

to stakeholders. Tis ensures that no FaCSIA sta can be unaware o the department’s

responsibilities and who and what they are accountable or.

Te Secretary spoke to all sta on a regular basis about the change, why it was important

and how they could contribute. Senior managers were also required to promote the message

clearly and consistently.

So that all newcomers to the department receive the same message, the ‘One-FaCSIA’

approach and strategic ramework orms the core o the induction programme.

Monitoring

Like many other large departments, FaCSIA has established standing committees that

oversee various aspects o governance. Te Executive Management Group (EMG) consists

o the Secretary, Associate Secretary, Deputy Secretaries, CFO and Group ManagerCorporate Support. Sub-committees develop and provide recommendations or

consideration by EMG in areas such as ethics, I, Indigenous policy, programme

management, people management, and research and evaluation.

wo senior FaCSIA committees, the Remuneration Committee and the Risk Assessment

and Audit Committee, report directly to the Secretary.

Te committees incorporate systems o review and monitoring to ensure the policy

o consistent operations and core business processes is implemented and eective across

the department.

Te executive regularly assesses the eectiveness o the integration o new unctions and sta

and the soundness o earlier decisions.

For example, this approach quickly identied that an earlier decision on timing ollowing

the merger o Indigenous Aairs needed to be revisited. At the time o the merger, there

were over 30 separate regional oces representing both Indigenous and ‘Family and

Community’ services. As it happened, it was 10 months beore the individual managers

or each state and territory were appointed and the oces amalgamated. Te department’s

regional prole is a large part o its public image, and as a result o the delay, stakeholders

may not have seen clear evidence o the merger in the services provided. Consequently, the



29

department now believes that any uture amalgamation o oces representing the

department’s ‘public ace’ should be accomplished as quickly as possible.

Benets

FaCSIA believes the Minister, its stakeholders, sta and the public now have much greaterclarity about what the department’s objectives are, what the priorities are, and who is

responsible and accountable or what.

Further, i and when uture machinery o government changes happen, FaCSIA will be

ready. Te department has systems in place to ensure that new unctions and new sta are

merged quickly into the organisation rather than operating as i they were separate entities.

FaCSIA makes the point that private multi-billion dollar agencies making signicant

structural changes generally provide plenty o notice to their sta, stakeholders and wider

public and implement change over time within a well-planned and rehearsed strategy.

Similar-sized and nancially responsible public service agencies don’t always have that

luxury—machinery o government changes can be announced one day and implemented

the next. Tat makes it particularly important to be well prepared.

Another benet is that the department’s governance systems are much stronger, more robust

and clearly understood. Tis signicantly lowers risks and increases responsiveness to the

Government and the public.

Key messages

1. When dealing with machinery o government changes, integrate nancial, I andother corporate unctions rst and as quickly as possible. Tis is oten the initial

driver in bringing new sta into the department’s culture.

2. Tink careully about how to prioritise implementing changes ater a machinery

o government change. Don’t always do the easiest things rst. In hindsight or

FaCSIA, the merger o regional networks should have occurred earlier.

3. Another area that is important to address early is the development o consistent

perormance measures that are relevant across the whole organisation so that

timely and meaningul comparisons can be made.

4. Changing culture takes time; in the meantime make sure you implement eective

compliance measures and systems earlier to reduce governance risks. Strong

compliance systems in themselves are a driver o cultural change.



30

Department of Foreign Affairs and Trade

Movingbacktoacentralisedstangsystem—whytheDepartmentofForeignAairsandTrademovedawayfromadevolvedapproachand,inordertomeetthedepartment’s

specicneeds,establishedacentrally-controlledstaplacementandperformancemanagementsystem.enewsystemdemonstratesstrongleadership,consistency,

transparencyandaccountability.

The department

Te aim o the Department o Foreign Aairs and rade (DFA) is to advance the

interests o Australia and Australians internationally. Te department’s goals are to

enhance Australia’s security; contribute to growth in Australia’s economy, employment

and standard o living; assist Australian travellers and Australians overseas; strengthen

global cooperation in ways that advance Australia’s interests; oster public

understanding o Australia’s oreign and trade policy and project a positive image o Australia internationally; and manage the Commonwealth’s overseas-owned estate.

Te department’s work is carried out by more than 3 400 people employed in Canberra,

in state and territory oces and in a network o overseas posts.

The challenge

In the late 1990s, several actors combined to prompt DFA to change the way it handled

placements o existing sta within the department and overseas. In 1998, the department

had to manage signicant unding cuts and an associated reduction o around 150 sta.

Te department also had an inconsistent and, sta were saying, inequitable system or giving

sta opportunities to develop their skills and experience by moving to other positions both

within the department and to overseas postings. Division heads made most decisions about

sta mobility so that sta applications or a move were usually determined largely on the

opinion o one or perhaps two senior managers to whom they reported.

As a result o division heads picking the ‘best and brightest’ sta returning rom overseas

posts, DFA also ound that the devolved system let a pool o sta, paid centrally, who were

not in high demand and who were not attached to any specic programme. At the same

time, some critical areas were under-resourced.Finally, some work areas had developed a reputation or being ‘sexy’ and high prole and

attracted the most talented sta while other work areas had diculty attracting good quality

sta.

Tis situation resulted in uneven sta resourcing o both quantity and quality across

divisions and across the department. It was also incompatible with any eective strategy

to reduce sta numbers while continuing to meet the Government objectives.



31

The system

In DFA, the Corporate Management Division (CMD) is now essentially responsible or

the placement o all existing Australia-based DFA sta into internal (including overseas

post) vacancies. When divisions or posts have vacancies, they must be submitted to CMD

which then arranges or the vacancies to be advertised in administrative circulars.

CMD operates placement advisory committees that meet to consider vacancies and

applicants. For placements within Australia, the committees meet approximately every six

to eight weeks. For postings overseas, the committees meet twice yearly. Where necessary,

committees also meet on an ad hoc basis.

Te placement advisory committees consist o sta selected rom across the department by

CMD on the basis o their experience and skills. One member is rom CMD to ensure the

process is robust.

Selection and placement decisions are based on operational requirements and theplacements/posting preerences o sta. Each division is required to take an even share

o sta needing placement. Te department no longer has a pool o sta not attributed

to a programme.

Another advantage o the centralised system is that it allows the department to respond

more eectively to surges in activity or sudden crises. Te department can now deploy

sta more quickly and more strategically to deal with increased workloads.

CMD also controls the stang budget allocated to each division. Previously, divisions

could use unspent salaries unds or operating expenses. Now divisions have control

o administrative and programme budgets, but not their stang budget.

Te introduction o a more robust sta perormance management system helped to underpin

the success o the centralised stang system.

Previously, perormance ratings were decided entirely by managers. Tere was no moderating

system used across divisions or the department. As a result, 85 per cent o sta were rated as

superior or outstanding, rendering ratings meaningless as guides to comparative

perormance.

DFA introduced a perormance management system which is designed to ensure

consistency o approach and airness through the use o a moderating tool (at present 10 percent outstanding, 25 per cent superior, with the remaining sta assessed as ully eective,

eective or unsatisactory). It is applied not only across the department but across divisions

and broadbands. Because it is applied equally across all divisions, there are no longer ‘sexy’ or

high-prole divisions. All divisions now provide sta the opportunity to ‘shine’ and be

rewarded. For example, corporate divisions which previously had diculty attracting talented

sta now oer sta opportunities to gain experience and move upwards.

In addition, placement advisory committees use perormance ratings to help assess the merit

o applicants. Ensuring that perormance ratings and reeree reports are consistent with each

other is a useul mechanism o quality control.



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What was done

In 1998 the Secretary had a vision or a more eective, ecient, accountable and equitable

stang system within the department.

Te new approach was developed by CMD in consultation with the senior executive. Te

system works because it has consistent support rom the Secretary and the senior executive.

Monitoring

DFA considers that the system is eectively reviewed by sta each time DFA’s Collective

Agreement (CA) is renegotiated. Minor modications to the perormance management

system, or example, have occurred as a result o CA processes.

Tere is also an established system o regular reporting to both DFA’s senior executive

(quarterly) and division heads (ortnightly) on the operation and outcomes o sta selection

processes.

Benets

Te centralised system may not be an eective approach or all agencies, but it meets

DFA’s key needs. One o these needs is characteristic o only a ew APS agencies, that is,

the ability to deal with sta coming back rom overseas postings and an equitable system

o giving sta the opportunity to work in posts.

However, DFA’s other key needs are shared by other departments:

• thecapacitytolivewithinitsbudget

• aneectivesystemforensuringthequantityandqualityofstaareevenlyspread.

DFA’s divisions have an even share o both talented sta and sta needing urther

development.

DFA believes that sta have much more condence in the current system and that it

results in just and equitable outcomes. No longer do one or two managers ‘control a person’s

ate’. Opportunities in the department are based on airly applied and consistent

perormance-based measures.

In summary, DFA believes the centralised stang system is more open, accountable and

eective in meeting its needs.



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Key messages

1. A basic and essential requirement is a sound inormation management system.

It is essential to know exactly how many sta you have, their level and where they

are at any time. DFA believes that without such a system their particular stang

arrangements would be unsuccessul.

2. A sta placement system, supported by a strong, consistently applied perormance

management approach across the department, can address perceived problems

such as inconsistency and inequality o development opportunities and sta

placement, popular and less popular divisions and placement o returning

overseas sta.

3. Corporate management divisions must have the highest reputation in terms o

integrity and impartiality. Otherwise sta, division heads and senior executives

will not trust and support the system.

4. Tere must be undiluted support rom the top. Inormation management,

perormance management and sta placement systems cannot work without

the ull support o the senior executive and the ability o appropriate senior

management committees to operate with authority on a day-to-day basis.



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Department of Veterans’ Affairs

Howadepartmentsuccessfullymanagedthetransitiontoaneworganisationalstructurethroughtheestablishmentandimplementationofstronggovernanceandrisk

managementarrangements.Ofparticularimportancewasthedepartment’sfocuson leadership,strengthenedaccountabilityarrangements,astreamlinedcommitteestructure

andconsistentattentiontoidentifyingpossibleexposuretorisk.

The department

Te Department o Veterans’ Aairs (DVA) is responsible or carrying out Government

policy and implementing programmes to ull Australia’s obligations to veterans and their

dependants as well as providing a compensation claims management service to serving and

ormer members o the Australian Deence Force.

Te department has 2 400 sta located in the central oce in Canberra and in eachstate capital.

The challenge

Te department provides a range o entitlements and services to veterans and war widows

o the two world wars through to serving and ormer members o the Australian Deence

Force. Over time, the needs o DVA clients have changed, as has the geographical spread

and concentration o veterans. Te decline in numbers o World War II veterans has resulted

in a signicant reduction in departmental unding.

As a result, in late 2004, DVA’s leadership took action to ensure that the department could

continue to provide quality services to all veterans while acing the challenge to become

smaller, more responsive and better integrated.

The system

In 2005, under the banner o oneDVA , the department’s premier governance committee,

Executive Management Group (EMG), adopted a new organisational structure which

includes:

• thegroupingofsimilaractivitiesintovebusinessgroupswithanationalperspective

• astrongerbusiness-orientedmanagementapproach,whichfocusesonintegrationby

business unctions rather than geographical location, and strengthened accountability

relationships across the department to ensure appropriate business outcomes

• anew,streamlinedgovernancestructure.

Te restructure allowed the department to maintain a strong presence in each state and

protect the level o service to veterans, while managing risk and reducing processing time.

High quality business partnerships with providers had to be maintained and a national



35

approach to simpliying and standardising procedures adopted, along with an integrated

I system. Increased fexibility and encouragement o cross-department teamwork was

also important.

Te new governance structure comprises two key committees (Executive Management

Group and Audit Committee) supported by our unctional committees.

Te revised and streamlined governance structure aims to:

• berepresentativeofbusinessfunctions

• ensurecorrectandappropriateinformationisescalatedto,andconsideredby,the

right people

• reduceoverlapbetweencommitteesandreportingonthesameissues

• makemembershipofcommitteeslessburdensome

• ensureeachgovernancecommitteeidenties,managesandmonitorskeyrisksaccording

to its charter.

As the system has matured, it has positioned the department better to react and respond

to business process issues.

What was done

In 2004, the EMG established a working group to oversee a review o DVA’s Service

Delivery Arrangements. Tis group met monthly and was chaired at the Deputy Secretary-

equivalent level (SES Band 3). It reported regularly on progress to EMG which provided

overall direction and decision making. Te working group was asked to develop a broad overview o the department’s business

and provide options and strategies or uture service delivery in the light o the expected

decline in workload and thus unding. Te working group analysed the department’s key

competencies and business unctions and, ollowing a series o workshops at dierent

levels within the organisation, the new organisational structure emerged.

A number o ‘hot spots’ that could present signicant risk to implementation o the new

structure were identied. Tese included: the need to develop an eective change

management and workorce strategy; possible disruption to client service; non-alignmento I to business reorms; and uture planning.

Te department recognised that dealing with these problems could also involve risks so

a delicate balance was required. DVA needed to reduce costs while maintaining a viable,

committed workorce, including remaining an employer o choice and continuing to attract

new sta. Above all, the department needed to maintain the integrity o its processes.

Early in the planning stage, the department identied and established key initiatives

to ensure successul implementation o the changes. Tese included:



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• acomprehensiveconsultationandcommunicationstrategydrivenbytheSecretary

• aphasedapproach,involving‘demonstrationprojects’,toprovidelearningfromexperience

and including risk assessment as an integral part o the process

• commitmenttodevelopingadetailedimplementationplan,timetable,change

management strategy and workorce strategy • arrangementsforongoinggovernance.

A crucial part o the implementation process was establishing a new Business Integrity

Division ollowing the implementation model developed by the working group. Tis model

involved outlining roles, responsibilities and objectives and included a risk assessment

process. Te Business Integrity Division provides a whole-o-organisation ramework

to ensure that DVA complies with all legislation, regulations, policy and procedures and

identies and manages exposure to risk, while ensuring a seamless transition to oneDVA

without compromising the underlying integrity and compliance o activities carried out

by the department.

Following the successul implementation o the three demonstration projects (or example

the creation o the new Business Integrity Division), other business unctions were

integrated into the new structure. Tis phased approach allowed time or potential and real

problems to be identied and resolved beore the new structure was bedded down. It also

allowed ull implementation to be timed to t with the budget and business planning cycle.

Monitoring

Te new oneDVA structure requires rigorous attention to planning and risk management

at all stages o departmental activity, especially while going through the change process.

In particular, all committees monitor key risks in matters or which they are responsible.

Troughout the transition to the new organisational structure, sta surveys and sta

eedback sessions encouraged comment and suggestions rom sta, including directly

to the Secretary. Sta eedback was relayed to senior management orums or consideration

and action.

Te demonstration projects were specically designed to identiy problems and successes

which could be replicated, amended or discarded as appropriate. Lessons learned are applied

to ongoing change in the department.

Benets

Careul orward planning and strategic oversight at a high level ensured that the transition

to oneDVA was relatively smooth and achieved with minimal disruption to clients. Successul

implementation o the new structure enhanced departmental cohesion and highlighted the

level o commitment, cooperation, trust and openness which DVA sta bring to their work.



37

Feedback rom all stakeholders has been positive and there are demonstrable improvements

to the department’s service delivery, nancial management and strategic direction.

Te oneDVA strategy has laid the oundation or both immediate and longer-term business

and service delivery improvements.

Key messages

1. Development, maintenance and enhancement o a strong risk management

culture can greatly assist business improvement.

2. Adherence to good governance processes allows an organisation to eectively

manage radical change, and ensures that strategic decision-making can co-exist

with eective day-to-day operational management.

3. An eective, fexible, integrated organisational structure can promote improvedclient service and enhanced ability to manage ongoing change.



38

Department of Industry, Tourism and Resources—case study one

Howadiversedepartmentwithcriticalstakeholderrelationssuccessfullyintegrates

measurement,monitoringandreviewofstakeholdersatisfactionintoitsdepartmentalgovernanceframework.edepartmentachievesthisbypayingcloseattentionto

identifyingpossiblerisksandimplementinggoodreporting,analysis,complianceandaccountabilitysystemstoensurethatitmeetsitsstatutoryobligationsandbusiness

objectives.

The department

Te Department o Industry, ourism and Resources (DIR) aims to oster the increased

prosperity o all Australians through internationally competitive and sustainable business

in the local and the growing global environments.

Te department does this through:

• enhancingthedevelopmentofinternationallycompetitiveandsustainablebusiness

through excellence in policy ormulation and implementation

• excellinginbusinessprogrammedesignandservicedelivery

• remainingarespectedsourceofknowledgethroughitsunderstandingofthebusiness

environment and business networks.

Te department has around 2 000 sta in its central oce in Canberra, state capital cities

and some regional centres.

The challenge

In October 2001 the department conducted its rst stakeholder satisaction survey. Te

decision to undertake a survey came about due to the need to judge whether the department

was making appropriate use o resources in delivering its business outcomes.

Tis rst survey was designed to align with the department’s outcomes/outputs ramework;

to help the department meet its obligation to report on stakeholder and customer

satisaction; and to assist in the development o a client service charter.

Te department does not have a monopoly on the provision o industry policy andprogramme implementation, which was one o the reasons or the decision to develop

the survey. Departmental sta needed to be ully aware o their successes but also any

circumstances in which the department’s perormance could be improved. In this context,

an issue o signicant importance to the department was the need to address the risk to the

department’s reputation as an industry player o integrity and probity.



39

The system

Te department’s stakeholder satisaction surveys obtain views about how well the

organisation is perorming in a range o areas, particularly relating to policy development,

programme implementation, and sta service. Te surveys also identiy opportunities or

improving the department’s relationship with key stakeholders.

Stakeholders surveyed include industry peak bodies, proessional associations, state

government departments, local government bodies, academic researchers, and business

leaders.

Measurement o stakeholder satisaction is an integral part o the business o the

department. Te Strategy and Communications Branch within the Corporate Division

manages the surveys and is also responsible or business planning and overall governance

issues in the department. I a survey shows a deciency in a particular area, the branch will

provide a report to senior management, but will also alert the division to a possible risk area

which needs attention, and provide support and advice i appropriate.

What was done

Te department’s highest level governance committee, the Executive Committee

(comprising the Secretary and three Deputy Secretaries), made the decision to implement

the DIR Stakeholder Survey in 2001.

Te department’s surveys have all been conducted by independent research consultants,

selected ollowing open tender processes—with contracts generally running or two survey

years. Te Strategy and Communications Branch has managed the activity in this way to

ensure that a proessional and independent approach is ollowed and, through retesting the

market every two years, ensuring that value or money is achieved.

In addition to conducting the survey and reporting on results, the consultants have also been

responsible or designing the survey instrument, incorporating drat questions developed by

Strategy and Communications Branch in consultation with all divisions. Te core questions

have remained largely the same since 2001 to ensure reliable longitudinal analysis and

identication o trends over time.

A total pool o 1 600 stakeholders is identied by divisions each year. From these, the

consultant randomly selects a sample o about 600. Each division is set a quota o stakeholders to ensure statistical reliability. Only stakeholders who have been in contact with

the department during the previous 12 months are contacted to take part in the survey.

Inormation included in the stakeholder list allows the identication o the specic division

and sub-activity relevant to the stakeholder. Tis acilitates ocused responses to questions

and allows divisions to identiy and deal with possible areas o poor perormance or risk.

All o the 1 600 stakeholders in the pool are contacted by ormal letter (via email) advising that

the survey is being undertaken and seeking their cooperation i contacted by the consultant.

Tis initial contact assists in the achievement o a nal 80–90 per cent response rate.



40

Surveys are conducted via telephone interview which typically take about 15 minutes.

Stakeholder response to the survey is voluntary. Te department insists that i multiple

people in an organisation are interviewed, the consultant ensures that the same interviewer

speaks to them all.

Te department requires the consultant to provide reports containing data and analysisat a departmental and divisional level, with comparative analysis o trends rom previous

years. Te survey results are provided to the Executive Committee and all divisions so that

planning or ollow up action may be taken. In addition, a summary o key survey outcomes

(at the departmental level) is provided to all 1 600 pool stakeholders.

DIR has also reviewed, streamlined and reocused its committee structure, resulting

in a governance ramework where the principal decision-making body is the Executive

Committee, which comprises the Secretary and Deputy Secretaries. Te Executive

Committee meets each week to make key decisions, review risks and set strategic directions.

o assist the Executive Committee’s decision making, the department has also establishedthree key committees to ocus on specic areas o organisational management: Audit,

Strategic I, and Security. Tere is also a variety o consultative committees at the divisional

and cross-divisional level.

Monitoring

Te survey process itsel is a review o perormance and the outcomes are closely monitored

based on internal and external eedback.

While the results o the rst survey were used to develop the department’s Client Service

Charter, subsequent results will be used to inorm a review o the charter in 2007–08.

While the survey has generally been undertaken on an annual basis, in 2004 the department

piloted a biannual survey approach to enable a more rapid response to any emerging

concerns identied by stakeholders. Tis biannual pilot was not continued in subsequent

years, partly because no new issues were identied, but also to reduce the imposition on

stakeholders. Over the years, the executive and divisions have provided eedback to Strategy

and Communications Branch requesting improvements to documentation o the survey.

Tey also requested a change to timing, since the survey was initially conducted during the

Budget process. Similarly, stakeholders requested a change to the timing o the survey to

better match their business processes.

Each year the survey methodology is reviewed to ensure that it refects departmental

requirements. However, due to the need to benchmark inormation over time, questions

and methodology have remained largely the same since the rst survey. Te major exception

is the inclusion in 2007 o a small number o division specic questions.

A more ormal internal review o the process may be undertaken at the end o the 2007–08

nancial year to determine whether the department’s needs are being met eectively through

the current approach.



41

Benets

Te survey results provide:

• Executive Committee with valuable information about high risk pressure points

in the department

• divisions with information or tools they need to build improvements into their

business plans

• the department with feedback to assist staff in enhancing their dealings with stakeholders

and customers.

Te survey process, and the results produced, assist the department to meet statutory

obligations and business outcomes. As a result, the survey is considered to be a valuable

component o the department’s business and governance improvement process.

Key messages1. Surveying stakeholder perceptions o departmental perormance provides

inormation which encourages improved business outcomes and enhanced service

delivery.

2. A stakeholder survey should only be considered i you are serious about building

the survey into the department’s business planning and delivery ramework.

3. Management o a stakeholder survey is best located in the same business area that

has responsibility or other strategic and governance matters so that any necessary

remediation can be dealt with immediately.



42

Department of Industry, Tourism and Resources—case study two

Howalargeanddiversedepartmentundertookathoroughreviewofitscorporate

governancetoassess,deneandidentifytheeectivenessandtransparencyofthedepartmentanditsoperations.

The department

Te Department o Industry, ourism and Resources (DIR) aims to oster the increased

prosperity o all Australians through internationally competitive and sustainable business

in the local and the growing global environments.

Te department does this through:

• enhancingthedevelopmentofinternationallycompetitiveandsustainablebusiness

through excellence in policy ormulation and implementation

• excellinginbusinessprogrammedesignandservicedelivery

• remainingarespectedsourceofknowledgethroughitsunderstandingofthebusiness

environment and business networks.

Te department has around 2 000 sta in its central oce in Canberra, state capital cities

and some regional centres.

The challenge

A clear and accountable corporate governance ramework is vital to the department’scontinuing ecient operation. Te department has a strong and comprehensive governance

ramework including:

• keycommitteesandinformationsharingforums(Executive,ICT,security,audit,portfolio

managers, executive ocers, strategic research, etc.)

• aperformancemeasurementsystem

• anannualkeystakeholderssatisfactionsurvey(seeseparatecasestudy)

• astrategicriskmanagementsystem.

Tis ramework has evolved over the years, adapting over time to meet changing needs.However, it was timely to undertake a review o corporate governance to identiy areas

o potential improvement, examine implications or uture governance arrangements, and

consider how the review ndings could be used to improve the department’s approach to

achieving its business goals.

The system

An external audit rm was commissioned to review the department to assess how its

governance arrangements contributed to its overall perormance and the delivery o its

goods, services and programmes.



43

Te review also sought to ensure the department’s governance meets the requirements o the

law, regulations, published standards and community expectations o probity, accountability

and openness.

Te audit reviewed the department’s governance arrangements against current better practice

and in particular the ramework recommended in the ANAO Better Practice Guide or Public Sector Governance .

Specically, the ollowing areas were reviewed:

• leadership,ethicsandculture

• stakeholderrelationships(internalandexternal)

• riskmanagement

• internalconformanceandaccountability

• planningandperformancemonitoring

• externalconformanceandaccountability

• informationanddecisionsupport

• thereviewandevaluationofgovernancearrangements.

What was done

Te audit report made a number o key ndings. On the positive side, it listed the

department’s strengths as ollows:

• havinginplaceallthekeycomponentsofcorporategovernance

• the‘toneatthetop’assetbytheSecretarywasconsideredextremelypositive,withademonstrated commitment to high ethical standards, regular promotion o the APS

Values and Code o Conduct, removal o ‘red tape’ and clearly delegating responsibility

in a manner that allows managers to manage

• theSecretarysetastrongandconsistenttoneforholdingtoaccountthedepartment’s

senior managers and sta through his personal actions and infuence as well as through

departmental policies

• theimportanceofaccountabilitywasfoundinnumerousdepartmentaldocuments,

emphasising the importance o clear roles and responsibilities or all sta

• therewereclearlinkagesbetweenthestrategicplan,businessplansand operational/work plans

• therewasanextensiverangeofcontrolsinplaceinthedepartment.

Te areas on which the audit recommended the department could concentrate, and the

actions the department has taken in response, are outlined below.

Overarchingcommunication: Te review suggested the department consider ways to better

articulate and communicate the corporate governance arrangements while maintaining

fexibility and responsive decision making.



44

Te department has developed a ramework or implementing a better communication

strategy. Inormation on governance has also been included in the orientation programme

or all new starters as well as the Middle Management Development Programme.

Committeerolesandreviews: Te review ound there was limited understanding o what

committees ormed the governance structure, and the roles and responsibilities o some

o the committees. Similarly, there were diering views on the contribution to corporate

governance o the some o the committees. Te department has since reocused some o its

committees and better articulated their roles on the department’s intranet and in relevant

training packages. Documentation ormalising the governance structure has also been placed

on the intranet.

Te review also ound that corporate governance arrangements had tended to be reviewed

only as either part o a ormal audit programme or when membership o committees

changed, particularly the chair. Te department has initiated regular reviews o the role

and perormance o its corporate governance committees as part o a planned and

coordinated approach.

Strategicdirectionlinkedtostrategicrisks: Another nding was that the department’s

strategic direction was not clearly linked to the strategic risks that it aced in achieving

its objectives. Te review recommended that, as part o the department’s annual strategic

planning and budgeting process, the Executive Committee should develop a Strategic

Risk Assessment based on the key risks derived rom its Strategic Plan.

Tis issue has largely been addressed, via the development o a departmental Strategic

Risk Framework which has been incorporated into all divisional and work unit plans andreporting rameworks.

Sharingoperationalandbusinessknowledge: Te review ound that many o the senior

managers interviewed were concerned that the management and operational inormation

held within individual divisions and by individuals, particularly by some senior managers,

was not used or could not be accessed by other divisions or individuals due to lack o

knowledge, absence o opportunities to share the knowledge, or simply being too busy.

Inormation-sharing orums are now regularly scheduled or senior managers.

Comprehensive,multi-directionalinformationchannels:Another ongoing issue or mostagencies is how to eectively move inormation and knowledge around a diverse agency,

particularly with heavy reliance on division heads as the prime channel o communication

up and down the organisation. Te review recommended alternative channels needed to be

developed or enhanced in order to ensure better two way communication.

A number o communication activities have been, or continue to be, implemented and

enhanced. In addition, business planning meetings are scheduled with all SES and the

Secretary. Te Secretary (and/or Deputy Secretaries) attends all orientation and middle

manager training courses.



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Integratedriskmanagementsystemsandplanningframeworks: Te department’s

large range o plans also highlighted a weakness: the plans were not risk-based, they

had been developed independently o each other, and there was no overall integration

into a comprehensive strategic planning ramework.

A new business planning ramework has been implemented. Tis ramework integratesstrategic priorities, resource allocation, risk management and reporting into a structured

ramework which also fows down into individual perormance planning and reporting.

Formal,consistentriskmanagementprocesses: Te review concluded that risk

management needed to be better embedded in the department and a sustained commitment

rom the top would be needed to ensure that a risk management culture existed at all levels

in the organisation. Tere was an imbalance between intuitive and ormal risk management,

with personal preerences rather than corporate protocols sometimes being ollowed, making

it dicult to establish accountability.

Te department’s current approach to risk management has been reocused to engage senior

managers in the process o embedding an eective risk culture into the department, and to

encourage a more systematic approach to risk management.

Te department has dedicated additional resources and established a new Risk Management

Section.AWorkUnitPlanhasbeenestablishedandanumberofkeydocumentshavebeen

upgraded. Further, the Executive Committee and Internal Audit Committee have agreed to

new procedures as part o the business planning process to embed an eective risk culture

within the department.

Monitoring

Te department will continue to monitor and improve those aspects o governance

highlighted in the review. In particular, it will continue to monitor and review its internal

governance committee structure to ensure that the commitees’ roles and perormance remain

aligned with departmental objectives.

Benets

Te corporate governance review will ensure the robustness that is a eature o the

department’s governance strategy continues to be the oundation o its success. Te

department undertook the review knowing it had a good system, but knowing also there

was room or improvement. It recognised that it needed to better align some o the

structures and processes which had been developed over time.



46

Key messages

1. Review corporate governance to highlight things you could do better (rather than

highlighting things you are not doing well). By doing things better, you will be

doing things dierently and this may well take adjustment on the part o sta and

on the part o those who deal with sta.

2. An overwhelming actor in any corporate governance ramework is the tone rom

the top. Commitment to leadership, ethics and culture is a critically important

element o corporate governance. Another critical element o a robust and

comprehensive corporate governance process is that the ramework is led by—and

inclusive o—the very top levels o leadership in the department. Te Secretary

and the Deputy Secretaries are the drivers and their active participation is

essential to its successul operation.



47

Department of Immigration and Citizenship

Howadepartmentdevelopedandimplementedagovernancecommitteefocusingon valuesandstandardstoimprovedepartmentalprocessesandperformance,through

strongleadershipandeectivecommunication,andbyapplyingsoundaccountability,reportingandcompliancesystems.Identicationofpossiblerisksandpayingattention

toissuesofintegritywerealsoimportant.

The department

Te Department o Immigration and Citizenship (DIAC) delivers the Australian

Government’s migration, reugee, humanitarian, citizenship, multicultural aairs, settlement,

immigration compliance, and immigration detention programmes. DIAC’s purpose is to

‘enrich Australia through the well managed entry and settlement o people’.

Te department has about 7 000 sta located in Australia and overseas, including about850 locally engaged sta.

The challenge

Late in 2005, the Palmer and Comrie reports into the ormer Department o Immigration

and Multicultural and Indigenous Aairs’ handling o specic immigration matters

highlighted problems with the department’s perormance in client service, accountability

and leadership. o address these issues, the new Secretary decided to revise the department’s

governance ramework and culture. As part o this large change, the department set up

a number o new governance committees to strengthen accountability and decision

making, and manage particular areas o risk to the department.

One o the rst governance committees to meet in December 2005 was the Values and

Standards Committee. Tis committee was established to address key elements o the

ndings o the Palmer and Comrie reports. It was required to engage actively with key

stakeholders and ensure that sta were trained to do the work expected o them. It was

also asked to consider the department’s understanding and application o the APS Values,

especially in the areas o accountability, leadership, ethics, integrity and the public perception

o the department’s work in those areas.

Te Values and Standards Committee is one o ve governance committees that reportto the key senior advisory committee, Executive Committee (EC). EC is supported

by a Corporate Leadership Group. Other committees reporting to the EC include the

Department Audit Committee, People Management Committee, Systems Committee

and DIAC Perormance Management Committee.

Te work o the DIAC Perormance Management Committee (DPMC) provides an

example o how the governance structure is helping to improve and manage the quality and

consistency o the department’s perormance. DPMC is responsible or establishing service

standards and strategies, monitoring service delivery perormance, and ensuring best practice

is identied and replicated. Tis committee is supported by Perormance Management



48

Boards in each o the policy and programme divisions, ensuring that all areas o the

department contribute to the perormance management system.

Large and complex departments such as DIAC are always challenged by the need to balance

investment with available resources, and this is a major ocus o the restructured

department—balancing cultural, nancial and risk management aspects o its operations.

The system

Te Values and Standards Committee operates at a strategic level, is open and accountable,

and assists the department to meet community expectations. It has strong support rom the

Secretary and senior executive.

o ensure depth and value regarding ethics and whole o government understanding as well

as a broader range o experience and an independent view, the committee includes our

external members: the Deputy Public Service Commissioner; the Deputy Commonwealth

Ombudsman; and two community members such as an ex-departmental retiree and a ormer

Integrity Commissioner at the Australian axation Oce/ormer Deputy Public Service

Commissioner.

Te committee is chaired by a Deputy Secretary and the internal members represent state,

territory, overseas and national oce interests. National oce participants refect areas o

particular interest or example training, client services and compliance.

Te Values and Standards Committee is required to meet quarterly, but actually meets every

couple o months due to the amount o work it needs to deal with.

It can commission reports rom other areas o the department and ask or a review o a policy or work programme.

What was done

Te Values and Standards Committee has an advisory role and makes recommendations

to business units on issues including training, departmental processes and policy review,

development and implementation. Tese recommendations are passed to the relevant

business area by the secretariat (sometimes under the authority o the Chair) and in most

cases are adopted by business areas.

Te committee ollows up on the suggestions and advice it has provided and expects

to receive eedback on progress, changes and successul implementation.

In addition to the committee, the department took the signicant step o establishing

a Values and Standards Branch specically responsible or providing secretariat support

to, and undertaking projects on behal o, the committee. Te secretariat also adds value

by contributing to content, injecting a departmental view, and actively managing the external

members. It meets with all members individually to discuss and explore suggestions or

better outcomes or the committee, and ensure that the committee meets all o its reporting

requirements.



49

Te branch also acts as a conduit between departmental business areas and the committee.

It is now taking responsibility or other departmental issues such as administration o the

newly developed sta attitudinal survey.

Importantly, the Values and Standards Branch was established to help drive the

implementation o a new departmental culture. It supervised the development o aninitiative designed to deal with deciencies in leadership identied by the Palmer and

Comrie reports. Te IDEAL Programme (Immigration Dilemmas: Ethics, APS Values

and Leadership) has the strong support o the Secretary, complements basic departmental

training and encourages dialogue between leaders and their teams to develop appropriate,

values-based responses to ethical dilemmas.

Te Values and Standards Branch provides regular progress reports on IDEAL to the

committee, and committee members are involved in and make suggestions about most

aspects o the programme including content, methodology and evaluation.

Ater each meeting, the committee provides drat minutes and a summary o activities

to EC (as the department’s key senior advisory committee). In accordance with the

Chie Executive Instructions and its own terms o reerence, the committee reports

to the Secretary every six months on issues such as its general operation; risks acing

the department regarding values; and the committee’s uture programme. Te Minister

also receives updates on signicant projects (or example, IDEAL) undertaken as a result

o committee recommendations.

Te Values and Standards Branch has developed a comprehensive communications

plan designed to ensure that all key stakeholders are inormed o matters relating

to the operations and requirements o the committee. Te plan includes actions required

o the Values and Standards Branch to support the committee in its governance role, timing,

targets, and risk mitigation strategies.

Monitoring

Part o the challenge and monitoring task or all departments is always to ensure that

decisions are taken on a sound nancial basis, and DIAC is no exception.

Following the Palmer and Comrie reports, the department as a whole is committed

to regularly reviewing its governance arrangements. Each governance committee isresponsible or monitoring the areas o risk or which it has responsibility, and or

determining broad directions and strategies or dealing with those risks.

Te Values and Standards Committee regularly monitors sta attitudes, behaviour and

complaint handling consistent with the APS Values. It provides advice on policy and

procedures and has specically assisted the department in the development o improved

systems or collecting and analysing complaint inormation. Tis review process and

inormation system constitutes a useul orm o ‘early warning alert’ or the department’s

strategic planning processes.



50

Te terms o reerence o the Values and Standards Committee require the Secretary toinitiate a review o the charter, membership and perormance o the committee at least onceevery two years.

InJanuary2007,thedepartmentcommissionedanexternalreviewofitsgovernance

arrangements. Te review concluded in May 2007 and its outcomes are being progressively implemented. Among other things the review examined the department’s governancecommittee structure, whether governance was well understood in the department and

whether this knowledge was being translated into appropriate behaviours, including

consultation and communication across the department.

Benets

Te Values and Standards Committee is considered an exemplar committee withinthe department and it attempts to model best practice. Te committee has helped toinstitutionalise the department’s new approaches to leadership and values consistent with

the APS Values and Code o Conduct. Its external members provide an important ‘outside’perspective. It has also helped to enhance a more positive and client-ocused culture andensured that training activities are aligned with APS Values.

Te committee has identied areas o duplication in the department and has advisedhow to draw together disparate activities and better integrate them into departmentalprogrammes. For example, prior to 2005, several dierent branches o the department dealt

with complaints handling. Tis committee identied the problem and the department hasnow adopted a sotware system which monitors, tracks and coordinates complaints handlingor the entire department. As a result, the department is moving to a much better clientservice regime.

Te committee takes a broad portolio-wide overview o activities, and eeds the inormationit gains back into the department. Because o this, it has an important coordination andlinking role, and can promote departmental cohesion in matters such as departmental

integrity and quality client service.

Key messages

1. Leadership, support and enthusiasm rom the Secretary greatly assist inpromoting and achieving cultural change in a department.

2. A dedicated branch to manage governance issues provides both appropriate sta resource to achieve outcomes, and the message that the issues are important to theExecutive.

3. External members (Government and/or non-government) can add depth, value and an outsider’s perspective to governance committees.

4. o obtain early warning o problems you need to develop quality inormation systems and appropriate systems or monitoring perormanceand conormance issues.

5. Evaluation needs to orm part o any approach to governance.



51

Department of Transport and Regional Services

Howadepartmentcommunicatesinformationtostrengthenandconsolidateitsgovernancestructureandprocesses,assistedbystrongleadershipandtheestablishment

ofaunitwithspecicresponsibilityformanaginggovernanceissues.

The department

Te Department o ransport and Regional Services (DOARS) is at the centre o the

Government’s agenda or Australian transport and regional issues. It supports the

Government in ostering an ecient, sustainable and competitive, sae and secure transport

system, as well as assisting regions to manage their own utures.

DOARS has a workorce o approximately 1 300 with employees located in the central

oce in Canberra as well as oces in the regions, states and territories.

The challenge

Prior to 2005, governance unctions were located in corporate areas throughout thedepartment. Following a review o these arrangements, the Secretary established a separateunit, the Governance Centre, reporting directly to him. Te Governance Centre was givenresponsibility or improving accountability, decision making and other business processes.

Te Centre was created in response to various highly-publicised examples o poorgovernance in private and public sector organisations in Australia and elsewhere. TeSecretary wanted to ensure that the department was appropriately directed, controlled and

accountable; demonstrating perormance against planned objectives; and conorming tolegislative requirements.

Te key initial challenge or the Governance Centre has been to engender ongoingawareness o the need or appropriate governance arrangements throughout the departmentthrough regular communication with all sta. Te centre also provides advice, systems and

support to assist all sta in ensuring governance principles and policies are applied.

The system

o achieve greater awareness o governance, the centre developed a communication strategy

to strengthen sta knowledge and understanding o these issues and to highlight how ailures in governance systems can adversely aect organisations.

Te communication strategy included a number o innovative and creative ideas orattracting the attention o sta, as well as using already established departmental

communication tools.

What was done

Te Governance Centre has a separate link on the department’s intranet site, and uses this

extensively to communicate and make inormation accessible to sta, as well as providing

links to other important websites.



52

A quarterly newsletter, called Governance Matters, is also made available on the intranet and

produced in small numbers in coloured hard copy or limited distribution to each division’s

executive area. Tis is also provided to all new DOARS employees during presentations

by the Governance Centre to induction courses.

Te newsletter contains general inormation about internal and APS governance issues,as well as a ront page eature article on a matter o particular or timely importance. For

example, the April 2007 issue dealt with the nancial management and accountability

ramework Certifcate o Compliance . On publication day, the intranet displays a news item

about the publication o the newsletter. Tis generally prompts considerable contact rom

employees regarding the content o articles, indicating a positive sta perception o the

newsletter’s quality and useulness.

Te department has a series o internally-developed screensavers and the Governance Centre

has created a number o attention-seeking, creative examples which fash governance

messages or around 30 seconds at a time. Focussing on areas o risk (or example delegationor certication issues), they engage sta by posing questions to employees about whether

they are ullling their legislative responsibilities and exercising their delegated powers

appropriately. Tey also set out scenarios that employees may deal with rom time-to-time,

thus requiring at least some attention to the issues.

Another means o communicating inormation about governance is the ‘desk drop’. Tis

is a short, hal page, brightly coloured sheet o inormation on governance issues dropped

on the desks o all sta. Te desk drop was created to vary the communication style, since

most other inormation provided by the Centre is available in electronic orm.

Te rst desk drop covered the important issue o delegations. As part o its process

o continuous improvement, the Governance Centre sought to remind sta o the

signicant risk to the department posed by making decisions and taking actions without

the appropriate authority. Tis was also considered an important issue due to the attention

that the Department o Finance and Administration is giving to compliance with the

Government’s nancial management and accountability ramework.

Further support or departmental employees in terms o decision making and accountability

issues has been enhanced through the introduction o a delegations management system

called ‘i-Delegate ’. Tis system makes accessing inormation about the powers and the level

o authority employees have under law and other Government policies much quicker, easierand simpler, leading to a more robust process.

Te Governance Centre also provides secretariat support, and develops the drat agenda,

or a range o high level governance committees, including the department’s Audit

Committee and the Executive Management eam (a weekly meeting o the department’s

executive to discuss the week’s priorities). O particular note, the SES Management

eam, which meets monthly, provides a orum or all SES employees to participate

in organisational management discussions and provide eedback to the executive on

key governance issues. Governance is a standing item on the agenda each month.



53

Te SES Management eam meeting oers the Governance Centre an excellent

opportunity to present governance inormation to senior management, and to raise the

prole o the Centre and its issues. External speakers (or example rom the Australian

Public Service Commission or Department o Finance and Administration) are also invited

to speak at SES Management eam meetings.A Catalogue o Governance Committees provides the terms o reerence, objectives and

operational details o the range o governance committees including, among others, the

People Management Committee and the Strategic Inormation echnology Committee.

Te catalogue is available to all sta on the Governance Centre’s intranet pages and helps

to raise awareness about decision making and consultative processes in the department.

Monitoring

Te centre has not yet undertaken ormal monitoring o the success o its communication

strategies, but it receives ongoing positive eedback rom employees and management.

Benets

Te high prole that the Governance Centre has developed since its inception has brought

governance issues to the attention o departmental employees, and created a much greater

understanding by employees o their responsibilities as departmental and APS employees.

Te establishment o the centre has ocused departmental resources and interest on

governance and created an area with clear responsibility or driving cultural change.

Key messages

1. Creative, innovative and accurate methods o communication within departments

are vital or eective application o governance principles, and also assist in sta

acceptance and understanding o such issues.

2. Support rom the Secretary or communication o governance matters raises

the prole o the issues and acceptance within the organisation.

3. Wide dissemination o, and easy access to, inormation about the department’s

governance processes and committees structure assists employees’ understandingo their responsibilities and avenues or decision making.



54

Department of Education, Science and TrainingHowthedepartmentusedstrongleadership,strategicplanning,goodcommunication,pastexperienceandestablishedprocessestosetupanewgovernancearrangementto

ensuredepartmentalobjectivesareachievedandGovernmentinitiativesareimplemented.

The department

Te Department o Education, Science and raining (DES) provides national leadership

in the development and implementation o policies to ensure the continuing relevance o

education, science and training to contemporary needs and the growing requirement or

lielong learning. It works in collaboration with the states and territories, industry, other

agencies and the community in support o the Australian Government’s objectives.

Te department has 2 500 sta located in the national oce in Canberra as well as in all

state capitals and the Northern erritory, and 19 overseas oces.

The challenge

Te department has grown over the last ew years. It has gained unctions rom other

agencies as a result o machinery o government changes, and was required to integrate

organisations including the Australian National raining Authority and the Enterprise and

Career Education Foundation.

Following the 2004 election, DES was required to implement a number o Government

commitments including the Investing in Our Schools Programme and the Australian echnical

Colleges Programme , and more recently the National School Chaplaincy Programme.

The system

In 2005 a cross-departmental group was established to look at election commitments or

eciencies in implementation. Tis proactive initiative was to assist the department in

meeting the challenges o delivering current and uture policy. Te group was called the

Election Commitments Coordination Committee (ECCC).

During 2005 and 2006, the work o the ECCC was largely accomplished. Having gained

much experience and learned valuable lessons rom this process, DES established an

Implementation Committee to ensure a continued response to policy implementation.Committees under this structure were inormal (they are not listed in the department’s

annual report) and they ceased to exist when the implementation o the committee’s

responsibility was completed. Relevant Branch Heads ormed the membership o these

committees, chaired by a Deputy Secretary.

Te ECCC’s experience resulted in the Implementation Committee becoming more

strategic and orward-looking, in line with the department’s intention to be a learning

organisation.



55

Building on the work o the Implementation Committee, a sub-committee o the Corporate

Leadership Group was established in May 2007. Te DES Implementation Sub-

Committee provides endorsement and strategic direction or new initiatives.

What was doneA driving orce in this process was one o the departmental Deputy Secretaries who was

anxious to ensure that new knowledge gained during the process was codied and organised.

In particular he wanted to position the department or uture budget or election

commitments when rapid implementation o new programmes would be necessary.

As a rst step the Implementation Committee supervised the preparation o a website which

consolidated existing implementation inormation. Called Implementing Initiatives in DES,

it includes a toolkit or better practice implementation and provides DES sta with a

model or dealing with implementation issues, especially in the light o tight timerames. It

also ocuses on the need or DES sta to implement their programmes according to publicsector integrity, accountability and public condence requirements. Te website was

launched in December 2006.

Te Implementing Initiatives in DES website is divided into our main areas:

• Approach which provides inormation on establishing, scoping and planning an initiative;

emphasises the importance o early planning and the value o creating a schedule and

timetable to ollow; and highlights specic issues or consideration, including the need or

attention to risk management, and issues associated with whole o government initiatives

• Deployment which provides inormation on useul tools or implementation, including

issues relating to record keeping and accountability

• Results which provides inormation on monitoring, quality assurance and evaluation,

including useul checklists or sta to ollow; and identies and outlines reasons or

undertaking evaluation o implementation initiatives

• Improvement which highlights lessons learned by the department’s ECCC and provides

inormation and contacts or sta to learn and adapt rom their own implementation

experiences.

DES believes that establishing governance structures is one o the rst steps in the process

o implementing policy or other initiatives. Governance arrangements should cover theinternal and (where relevant) external reporting lines and lines o accountability. It is

important to identiy key accountabilities and those sta, including senior executives, who

are responsible or the implementation and management o the policy or initiative.

Governance structures are also an eective means to draw on existing corporate experience

and share expertise. It is important to establish governance structures early as a means to

scope the initiative and manage the process.



56

Having developed its Implementation Website , the Implementation Committee then built

on the website and developed a DES Implementation Framework, in part inormed by the

ANAO and the Department o the Prime Minister and Cabinet’s better practice guide,

Implementation o Programme and Policy Initiatives (October 2006). As part o developing

the Framework , the Implementation Committee considered the degree to which it wasappropriate to expect its adoption by line areas with responsibility or implementing projects.

A risk-based approach was adopted within which small, less complex projects were to be

managed solely by the line area with no monitoring or reporting responsibilities. Where the

level o complexity, risk or sensitivity o a project was higher, the level o conormance to the

Framework and the level o external monitoring o progress required o line areas also

increased. Tese requirements were articulated on a single page matrix (provided at the end

o this case study) which mapped the increasing levels o conormance required to increasing

complexity. For the most complex implementations, line areas are required to have their

proposed project governance arrangements and the project risk plan approved by the DESImplementation Sub-Committee, and to include specic reerence to the project in their

business plans. Tey are required to adopt all aspects o the Framework and report progress

to the DES Implementation Sub-Committee through the lie o the project.

With the adoption o this approach, the DES Implementation Sub-Committee has turned

its attention to making sure that issues that have whole-o-DES impacts are considered

and appropriate priorities are adopted. Examples to be considered include recruitment and

stang strategies across competing projects, I deployments and devolution options to the

state oce network.

Monitoring

Improvement and review processes have been an important element o the implementation

initiative rom its inception as the ECCC. Te ongoing implementation process requires

that sta ollow an approach which includes appropriate planning, consultation,

communication and risk management to ensure that lessons learned are translated into,

and adapted or, new departmental arrangements and initiatives.

Benets

Rapid implementation o programmes has been a challenge or the department, but theImplementation Committee structure has been very helpul and the new Implementation

Website and Framework are expected to urther assist DES managers to implement new

proposals in line with the DES culture and governance process.

Te involvement o sta rom across the department in the Implementation Committees

has been valuable in encouraging and maintaining department-wide relationships and

networks and promoting a more orward-looking, creative, integrated and learning-oriented

organisation.



57

* Consideration should be given to using the Implementation Framework if:

L e v e l o f C o n f o r m a n c e

An initiative in thehigh level categoryincludes anything

that is politicallysensitive, has alarge budget or hasbeen assessed ashigh risk

•

•

•

•

All components ofthe framework areused

High levelgovernance isestablishedProgress isreportable to theCLG Subcommiteeon ImplementationIncluded in Groupbusiness plans

L ev el of G ov e

r n an c e

An initiative inthe medium levelcategory would

include anythingthat requiredimplementationarrangements to besigned off by theGroup Manager

•

•

•

The framework isused and decisionsrecorded

Governance is atthe Group and/or Deputy LevelIncluded in Branchbusiness plans

An initiative in thelow level categorywould includeanything lowrisk, small scaleeg. extension ofexisting programme

and locallyadministered

•

•

•

The framework isused as a guideGovernance is atthe local level egBranch Manager sign offNot included

explicitly in theBranch businessplans but maybe included inlocal plans andperformanceagreements

•

•

LowSmall scaleinitiativeNot sensitive

•

•

MediumMedium scaleinitiativeLow sensitivity

•

•

•

•

•

HighLarge scaleinitiativeSensitive or complex

Subject toeither the CIU or Gateway# review

Assessed as astrategic risk Potentiallydamaging toDEST or theMinister’sreputation

# The currentthresholds are:$10m and over for IT projects; and$20m and over

other procurementand infrastructureprojects.

Complexity of initiative Requirements re useof framework

*All initiatives are required to adopt and scale the Implementation Framework

Implementationis monitored

externally

Delegated

responsibility



58

Te value o this process has been demonstrated by the act that recent implementation

processes, with very tight timerames, have progressed very successully. For example, the

new National School Chaplaincy Programme was announced in October 2006 and schools

have been able to apply or unding since early 2007. Te Australian Skills Vouchers

Programme was also announced in October 2006 and applications have been available onlinesinceJanuary2007.

Key messages

1. When required to implement new initiatives rapidly, it is vital to rst establish

strong governance arrangements such as ensuring views, support and leadership

rom the Minister and executive; setting parameters; identiying risks, resources

and timerames; and establishing stakeholder relationships.

2. Early and smart planning and making use o established departmental processessuch as legal advice and risk management arrangements greatly enhances

implementation.

3. Developing an Implementation Committee structure and a model or sta to

ollow can assist you to rapidly incorporate new programmes and organisations

into the departmental environment.



59

Attorney-General’s Department

Redesigninginternalnancialsystems,governancearrangementsandprocedures—how Attorney-General’sshiftedtoamorestructuredandcentrallysupportedapproachby

implementinganinternalnancialframeworktomeetitsnancialobligations.Howitstrengtheneditsnancialmanagementandaccountabilitiesthroughstrongleadership,

reporting,communicationandcompliancearrangements.

The department

Te Attorney-General’s Department (AG’s) provides expert support to the Government

in the maintenance and improvement o Australia’s system o law and justice, national

security, and emergency management. Te department employs approximately 1 300

people predominantly in its Canberra oces with a small number o sta in the states

and territories.

The challenge

In the last ve years, several actors combined to prompt AG’s to review the adequacy and

appropriateness o its nancial management systems and the ability o these systems to

support the department’s operations as well as to meet current and emerging accountability

requirements, including the new Compliance Statement requirements.

Te AG’s budget has increased in response to increasing and more diverse responsibilities

and complexity o work. Te department is now responsible or administering complex

indigenous, legal and security related programmes as well as ull cost recovery operations

when previously much o its work was conned to policy. Te consequence is more complex

budgeting and reporting, challenges in matching annual revenue with expenditure as well as

aligning budgets and expenditure against expected programme delivery outcomes and

timerames, and increased nancial management responsibilities or line managers.

A review o the nancial ‘health’ o AG’s, done in conjunction with the Department

o Finance and Administration (Finance) in 2004, identied that:

• improvementswereneededinstrategicnancialmanagementandanalysis

• areviewofthebudgetpositionandforwardestimateswasnecessary

• additionalsupportshouldbeprovidedinrelationtonancialmanagementincluding to the groups though divisional business manager positions.

Te review also concluded that the responsibilities o the Chie Finance Ocer (CFO)

should be broadened and that the CFO should be part o the executive team.

The system

Previously, AG’s operated with nancial management as part o the corporate services

unction without a CFO in the executive team and with nancial strategy development and

management largely devolved to divisions. Its nancial management team was a small group



60

largely ocused on the operational aspects o nancial management and meeting external

requirements and deadlines. Tere were ew documented nancial polices or processes and

heavy reliance was placed on a ew, very experienced people.

What was doneFollowing the review a CFO was appointed to the executive team, and tasked with advisingon the nancial health o the department as well as developing and driving a programmeo ongoing nancial reorm and change.

Te CFO’s rst action was to conduct her own review o nancial management inconsultation with division heads. Tis resulted in the establishment o an internal nancialmanagement ramework which is the strategic nancial governance ramework or thedepartment and orms the basis or all nancial perormance and activities within the

department and guides urther reorms. Tis ramework is set out in Figure 1.

Figure 1: The elements of the nancial management framework

Business managers were placed in every division with ‘dotted line’ reporting to a new central

strategic nancial management section providing additional support to the groups anddivisions. Previously while the Deputy Secretaries had been supported by business managers,

only two divisions out o 11 had the support o a business manager.

As well as this strategic nancial support to divisions, the expanded nancial managementbranch is responsible or developing and implementing the internal nancial managementramework and providing consistent guidance and processes or nancial management inaddition to ongoing transaction processing, nancial management inormation systemmaintenance and support, and internal and external budgeting and reporting roles.

Although broader nancial guidance and support is centralised, business managers placed indivisions provide day-to-day support. Business managers report to their division head butalso ully participate in developing and implementing nancial reorms in cooperation

with the central nance team.

StrategicPlanning

Forecasting& Analysis

Control

Transaction Processing

Asset & Liability

ManagementReporting



61

While the need or change was initially identied by the Finance health review and

endorsed through the CFO’s own review it has been enthusiastically embraced by senior

managers as well as business managers and sta within the nancial management branch.

In each step o the reorm process, senior managers and division business managers were

consulted and involved and are now kept inormed through ‘30 second updates,’ but therealso needed to be strong upward and downward management rom the new nance team

to ensure momentum and compliance.

Managers are appreciative o the additional support and nancial inormation they now

receive both rom their business managers and rom nancial management branch, especially

given the broadened nancial responsibilities and the complexities o the programmes they

run. Tis is motivating them to be more proactive and to think collaboratively rom a ‘whole

o department’ perspective instead o just about the nancial outcomes or their own group

or division.

Business managers are kept engaged and inormed through a ormal network and regular

orums and inormation sessions in which they are encouraged to discuss issues and share

ideas. A business manager support network has also been established which is run and

managed by the business managers themselves.

Te appointment o the CFO to the executive has been a key actor in success both because

o the senior level infuence o the nancial role and also because o the strategic and

sustained ocus o this position to identiy and drive urther necessary reorms and improved

approaches to nancial management.

Changes and the higher standards needed are also supported by a nancial managementlearning and development programme or all managers and sta with nancial management

responsibilities. Tis programme has become a key part o the corporate training calendar.

Te central nance team is now better resourced as are all divisions. With the addition o the

business managers and changes to the central nance team, nancial management support

or the department has signicantly increased since the original review in November 2004.

Tere is only a small number o nancial sta remaining who were there two years ago

resulting in a higher than average turnover within the nance group. Tis has created the

opportunities to bring on new sta with resh perspectives and to develop a highly

proessional and cohesive nancial management branch to take the nancial reormsorward and meet new and changed responsibilities.

Te nancial management ramework still needs urther development beore it reaches the

point where the Executive and the CFO would like it to be.

Te nancial management branch needs to nish documenting all nancial procedures

to support their day-to-day work and that o the business areas; roll out the learning and

development programmes to complement the new nancial ramework; and tackle

procurement processes and practices to ensure that AG’s is ully compliant with the external

ramework and regulations and is applying consistent processes.



62

Monitoring

Te reorms continue to be guided by the nancial vision or AG’s that ‘Te Department,

its managers and external stakeholders have confdence in the fnancial management ramework

and the Department’s fnancial management capability’ .

A nancial management ramework programme is implementing the continuous

improvement projects. Fiteen projects have been completed, ve are currently underway

and around teen projects have been identied or the uture.

A ‘governance’ board o senior managers representing each o the groups oversees and

monitors the development and implementation o this programme o nancial reorms.

It recently requested an assessment o how well the changes already rolled out have been

accepted and implemented. Tis assessment will consider the current approach, what has

changed and improved, and what still needs to be done as well as assess the eectiveness

o communication mechanisms between the Financial Services Group and its key internal

stakeholders.

Benets

Apart rom the obvious benet o a healthy, eective and compliant nancial management

system, AG’s identies urther benets.

Tere has been a change in culture or the better. Managers and sta have a strong awareness

o their responsibilities and the importance o strategic nancial management. Tere is much

better collaboration among senior managers, whose concerns stretch to the nancial health

o the whole department, and not just their own domains.

Tere is a strong relationship between the rest o the department and the nance team

refecting trust and condence. Te strong nance team is seen as an enabler, helping the

department meet its policy and programme objectives.

Key messages

1. Set realistic timerames—make sure you take into account the impact o change

and the time it takes or others to understand and implement it. Regularly take

stock o where you are in your schedule and how you might need to adapt.

2. Resource new projects appropriately—ensure you have dedicated sta responsible

or developing and rolling out projects. Assign your experienced sta to the

projects allowing them to have the time to put in or the success o the project

and bring in temporary, additional sta to provide the usual day-to-day nancial

services.

3. arget senior sta—it’s always a challenge to engage senior management and to

communicate nance reorms eectively but they are essential to the successul

adoption o reorms.



63

4. Put the time and eort into documentation—written guidance and procedures are

core to providing support and continuity in business processes no matter who is

doing the job.

5. Invest in skilling and training nancial sta and senior managers—a challenge or

all departments is attracting and retaining skilled nancial sta. Establish ongoing

ormal and on-the-job nancial training to ensure that knowledge and skills are

spread widely and that uture sta turnover will not have an impact.

6. Be prepared to review and critique progress and make sure you celebrate

successes—ongoing review and communication is key to maintaining the

momentum and ensuring reorms remain current and relevant.



64

Department of the Environment and Water Resources

Howalargeanddiversedepartmentdevelopedan‘activitytracker’asariskmanagementandreportingtooltomonitorandreportondepartmentalissues.

The department

Te Department o the Environment and Water Resources develops and implements

national policy, programmes and legislation to address Australia’s environmental climate

change, water resources and heritage challenges.

Te department is large and diverse, employing approximately 2 200 sta in 14 divisions.

Te portolio has seven entities including the Bureau o Meteorology, National Water

Commission and the Oce o the Renewable Energy Regulator.

The challenge Te department has undergone several signicant machinery o government changes over

the last ew years, most recently gaining responsibility or the water resources portolio.

It is a large department covering a broad and varied range o activities and administering

over 50 individual pieces o legislation. As a result, the activities and resultant risks that it

manages are very diverse.

Te department has a range o internal governance committees. Te Senior Executive

Management Meeting, held every ortnight, is attended by the Secretary, Deputy Secretaries

and the heads o the Corporate Strategies Division and the Policy Coordination Division.

Tere is a weekly senior executive roundtable meeting, which also includes heads o all

divisions and portolio agencies. Other committees include an Audit Committee,

Compliance Executive, and Knowledge Management Committee.

Te need or a consistent, comprehensive snapshot o activities across divisions was

identied in 2005. Te executive required a good strategic overview o what was going

on across the department and its portolio bodies.

The system

Te Activity racker was introduced in early 2006 and was adapted rom a similar systemused in the Department o Industry, ourism and Resources. Some other departments use

comparable systems.

It is a quarterly report rom divisions to the Secretary and Deputy Secretaries to track

progress and identiy emerging risks associated with key activities. Te report lists key

departmental activities and their current implementation status, and details priority projects,

programmes and hot issues in the department.

Each division is asked to update the report template by assigning a single ‘trac light’ rating

or the overall progress/risk o each activity. Activities are assigned a trac light according to



65

the nature o the risk or issue. Red is high risk—serious, urgent problem; amber is medium

risk—possible serious problem but not urgent; green is low risk—no problem.

(Te guidance on assigning trac lights and the Shell Reporting Document are provided

at the end o this case study.)

A brie description o the status o the activity, emerging issues, sources o risk and action

taken is then provided. Te nal item o the report indicates the management response—

either that the matter is in hand and the Deputy Secretary inormed, or the involvement

o senior executive management or the Secretary is required.

Division heads may nominate activities or issues to be added to the list when updating the

report, or may remove activities that are complete or no longer a priority. Te report is then

compiledbythedepartment’sGovernanceUnitandprovidedtotheSecretaryandDeputy

Secretaries.

Due to the sensitive nature o the material it contains, the Activity racker is a protecteddocument. Only matters relating to their own division are seen by division heads.

What was done

Te idea o regular reporting on strategic risks was proposed to the senior executive in 2005

bythedepartment’sGovernanceUnit.eseniorexecutiveagreedtotrialareportonkey

activities, including trac light ratings or areas o risk in the department.

InpreparingthepilotActivityTrackerreport,theGovernanceUnitidentiedalistof

activities or inclusion in the report in consultation with the senior executive, and then

interviewed programme managers o the activities to identiy progress to date; what controls were in place; and what risks the Secretary needed to know about.

Based on eedback rom the senior executive, the reporting system has been modied twice

since it was introduced, both in its appearance and the preparation process.

Requests to update the Activity racker reports are now sent to division heads in the

departmenteveryquarter.eGovernanceUnitcompilesthereport,seekingclarication

on the input i required, and provides the drat report to the Deputy Secretaries or their

clearance/edits. Te report is then provided to the Secretary and to the Senior Executive

Management Meeting. Tis process ensures quality control and accuracy o the reports.

Monitoring

SixquarterlyActivityTrackerreportshavebeencompiledasatJune2007,thersttwo

o which were conducted as trials. It is regarded as a work in progress and is being rened

on an ongoing basis.



66

Benets

Te senior executive has ound the Activity racker a very useul tool to assist it to identiy

problems, or potential problems, at an early stage. Te simplied ormat that is used enables

clear, consistent and concise reporting by all divisions.

Key messages

1. Larger agencies covering diverse unctions, especially when those unctions are

varied over time through machinery o government changes, may nd it useul

to have a device such as the Activity racker to ensure that the senior executive

in particular have a strategic overview o issues in the department.

2. Tis type o monitoring and reporting system can orm an integral part o your

overall risk management strategy.

3. A key to ensuring successul implementation o the Activity racker is to have

a robust, well-dened rating system that is easily understood.



67

Department of the Environment and Water Resources—additional information

Guidanceonassigningtraclightsandreporting

1. ASSIGNING TRAFFIC LIGHTS

Usethefollowingpromptstoassigntraclightratings.Assignasingletraclight

indicating overall progress toward implementing the activity, rather than one each or project

plan, stang and expenditure.

No Yes

No Yes

YesNo

1. Is there a problem?

(actual or expected)

e.g. failed milestone,

anticipated delay, lack of

key stakeholder support(e.g. delay by agency,

Minister, state), bad press,

loss of key resource, or

other difficulties in

delivering results

2. Is it serious?

e.g. needs executive orMinister to intervene,

significant new resources

or wholesale revision

3. Is it urgent?

e.g. needs immediate

action to solve the

problem in the next6 months



68

2. REPORTING

Provide text explaining why there is an issue and the consequences o it, in particular actions

required by the senior executive.

A red rating should provide as much inormation as needed to explain the rating and

mitigation actions. Inormation can be provided as an attachment to the ‘activity tracker’

i required.

Informationrequiredfortraclightratings

Colour Meaning Consequence

RED High risk Serious, urgent problem

Attach a few lines to thereport to explain the mainsource(s) of risk and whatis being done to addressthem, or needs to be doneby senior executive.

AMBER Medium risk Possibly serious problem,but not urgent

Summarise the mainsource(s) of risk and whatis being done to addressthem.

GREEN Low risk No problem

Consider recommendingthat senior executive nolonger needs to monitor progress.



69

SHELL REPORTING DOCUMENT

Activity Tracker report

# June 2007

Activityorissue Source(s)ofrisk Managementresponse

1) Assign trac light

2) Add start/end date*

1)Updatetextonthestatus,emerging issues, sources o risk and action taken

1) Assign option romkey 2 below

* Start/end date: date o original Cabinet decision or Cabinet approved programmes, or milestone

date in Implementation Plan, or commencement date o programme (as appropriate)

Key 1: Assigning trafc lights

Red trac light = high risk; serious, urgent problem.

Amber trac light = medium risk; possibly serious problem, but not urgent.

Green trac light = low risk; no problem.

Down arrow inside the trac light = risk has decreased since last report.

Uparrowinsidethetraclight=riskhasincreasedsincelastreport.

‘N’ inside the trac light = new item; did not appear in last report.

No symbol inside the trac light = risk unchanged since the last report.

Key 2: Management response

Option Explanation

1 In hand—Deputy Secretary is inormed, no urther action required by seniormanagement

2 Senior executive management involvement required

3 Secretary’s advice – involvement required

B. Statistical analysis by Governance Unit

Changes in risk since last quarter

1. Newrisks

2. Heightenedrisks

3. Loweredrisks

PreparedbytheGovernanceUnit,June2007

N N N

<

<

<

<



70

Department of Employment and Workplace Relations

Howalarge,geographicallydisperseddepartmentcoveringarangeofsubjectmattershasstructureditsgovernancecommitteestoprovideexibilityaswellasstrongleadership,

directionandaccountability.

The department

Te Department o Employment and Workplace Relations (DEWR) provides the

Government with high quality advice, programmes and services to achieve three outcomes:

ecient and eective labour market assistance; higher productivity, higher pay workplaces;

and increased workorce participation.

Te department has a sta o 3 600 located in the national oce in Canberra, in oces

in all state and territory capital cities and in a number o regional centres.

The challenge

As a large agency, the challenge or DEWR was to set up a governance committee structure

that provided leadership and direction to its management and sta while at the same time

providing appropriate fexibility to deal with new unctions and policy directions as they

arise.

The system

Te department has developed a robust governance system, in particular through its

committee structure. Overall direction comes rom the Secretary, ensuring strong leadershipand coordination o governance issues within the department.

Te highest level governance committee is ‘Management Board’, comprising the Secretary,

all Deputy Secretaries, the Group Manager Corporate, Chie Financial Ocer, and Group

Manager State Oce Network. Te General Counsel has observer status on Management

Board, and oers legal advice, but does not participate in decision making.

Te role o Management Board is to provide active and visible strategic leadership to the

department, and its ocus is on broad trends and issues o importance to the department.

Te Secretary chairs weekly Management Board meetings. All areas within the departmentmay submit papers, and regular reports are provided by areas such as human resources,

nance, audit, ethics, security and property. rends and systemic matters relating to code

o conduct and harassment issues are also considered by Management Board to ensure that

departmental policies are appropriately applied.

Management Board has a strong supporting structure o sub-committees (such as Audit,

Ethics, Inormation echnology, and People and Leadership) which are typically chaired

by Deputy Secretaries (SES Band 3) or Group Managers (SES Band 2). Tere is also the

Remuneration Sub-Committee, chaired by the Secretary, which meets ortnightly to

consider remuneration matters relating to sta (in particular, new Australian Workplace



71

Agreements (AWAs), modications to existing AWAs and indicative perormance pay

ratings). Tis attention to detail ensures a consistent approach to agreement-making and

perormance outcomes across the department, as well as ensuring that the process is open

and ‘above board’.

Departmental management ollows a principles-based approach to set the culture and ethoso the department, establishing parameters and guidelines on issues and policies. Managers

are expected to take responsibility or managing risks, and in pursuit o that expectation,

they are provided with a clear outline o departmental policies and programmes and an

understanding o departmental direction and objectives.

What was done

Te department is structured according to its three outcomes, with a Deputy Secretary

responsible or each outcome. Tis clear alignment o outcomes and responsibilities

is an important element o any good governance structure.

Te department has established a process o setting up ‘oversight committees’ to deal with

new, oten complex, work ollowing machinery o government changes or new policy

initiatives. It has developed a model to ensure good governance practices are adhered

to in addressing specic issues such as the Workplace Relations policy and legislative

development, and Welare to Work initiatives.

For example, the Welare to Work committee met weekly to develop strategies to deal

with new issues acing the department such as the developing relationship with Centrelink.

Committee members worked through cases, examining relevant policy and legal issues,

programme management, and people management issues. Members were able to learn romeach other and to share inormation to ensure eective and speedy implementation o the

programme.

Te oversight committees are ormal but temporary, ceasing to operate once a matter is dealt

with (ater which time the residual work alls under the normal committee structure). While

topic-specic, they bring together relevant people rom various areas in the department that

have an interest in a particular matter.

Monitoring

DEWR undertakes ongoing monitoring o the suitability o its governance structures.

As a result, in 2006 the Group Manager State Oce Network became a member o

Management Board. Tat position was added to ensure that the department ’s very

signicant and high prole state and regional network was made an integral part

o the departmental governance structure.

Overall, DEWR believes that its committee structures have worked well. Tere have been

some minor modications and adjustments over time to ensure the currency and

appropriateness o the governance structure.



72

Benets

Te oversight committees not only produce better outcomes because o the involvement

o all key areas, but also help to establish networks across the department that might not

otherwise have existed. As a result, ongoing working relationships are established, which

urther assists in breaking down any ‘silo’ mentality (always a challenge in large agencies)and creates a eeling o cohesion in the department.

Key messages

1. Te Secretary plays a crucial role in setting the direction o the department

and its governance arrangements, in particular the establishment and operation

o committees.

2. A strong committee structure provides overall guidance or managers

and helps them to understand the department’s ramework, objectives andintended outcomes.

3. Te use o ‘oversight committees’ in addition to the ormal ‘standing’

committee structure can be particularly eective in a large department

which is geographically dispersed and covers a range o distinct but oten

inter-related policy areas.



73

Department of the Treasury

Howadepartmentchangeditsinternalgovernancecommitteeandorganisationalstructuretobetterfullitsroleandmissionstatementbyimprovingcommunication

arrangements,strengtheningitsstrategicfocusandimprovingconsultation,reportingandaccountabilitylines.

The department

reasury provides advice to the Government on improving the wellbeing o the Australian

people. It achieves this by providing sound and timely advice to the Government, based

on objective and thorough analysis o options, and by assisting reasury Ministers in the

administration o their responsibilities and the implementation o Government decisions.

Te department currently has a sta o just under 850, although its portolio (o 11 agencies

including the Australian axation Oce and the Australian Bureau o Statistics) numbersover 28 000 sta.

The challenge

Until1998,TreasuryhadatraditionalAPSorganisationalstructure.Inthatyear,aspart

o a major reorm process, a new reasury Management Model was instituted. Tat model

set out: the organisation’s purpose and objectives; an organisational ramework; people

systems; and support or management development. Te model was developed to ensure

the department ocused as clearly as possible on the needs o Ministers and in a way that

maximised the satisaction that sta derive rom working in reasury.

Te new structure comprised Executive Directors (SES Band 3) reporting to the Secretary

with general managers (SES Band 2 or SES Band 1) reporting to Executive Directors.

Unitmanagers(SESBand1orEL2)reportedtogeneralmanagers.Notablythedepartment

removed the ormer First Assistant Secretary layer o management to improve eciency

and job satisaction by creating a management structure with clearly dened roles and

responsibilities.

Tese reorms were generally considered to be very positive or the department, and this was

conrmed by responses to a sta survey some years later. However, some deciencies relating

to the new structure and roles and responsibilities o senior management emerged over time. While Executive Board (Secretary, Executive Directors and General Manager Corporate

Services Division) considered it important to retain the acknowledged benets o the 1998

reorms, it also wanted to improve departmental perormance by making better use o its

more senior people. Te aim was to improve the strategic leadership o the Executive Board;

enhance the SES leadership capability; and acquire a credible and sustainable ‘surge’ capacity.

Te senior executive group also needed to be better at providing management oversight

o policy crisis projects while not taking complete responsibility or the large amount o

work involved.



74

The system

New arrangements to address the concerns expressed by the executive and sta came into

place in September 2002.

Tese included designating particularly challenging general manager positions or SES Band

2s; creating more SES Band 1 managers and specialists to ensure that the department’s

objectives were met; including SES Band 1 subject specialists in large teams managed by

SES Band 2s; and including in each group a senior executive resource working on strategic

issues, reporting to the executive director but also working with other group sta and the

Executive Board.

In addition, sta titles were claried to highlight the specic policy advising role o senior

sta, while not ruling out a small number o sta at these levels being recognised as subject

matter specialists.

Underthesearrangements,ExecutiveDirectorssetupformalandregularmechanismstogive EL2s in their group an opportunity to express rst-hand their views on organisational

arrangements and management issues.

At the same time, the department moved to a more clearly dened governance committee

structure with the intention o ocusing Executive Board attention more specically on

strategies and systems, and enhancing the role o SES Band 2 employees.

Te Executive Board now holds the ollowing meetings:

• weeklymanagementmeetingsfocusingonimmediateprioritiesforthecomingweek

and cross-group coordination

• monthlyorganisationstrategymeetingsaddressingcorporategovernanceandother

key issues

• monthlypolicystrategymeetingsdealingwithmajorpublicpolicychallengesfacing

the reasury—attended by SES Band 2 employees and other SES as required

• six-monthlypolicystrategyforumsinvolvingallSES,whichaddressmajorpolicyand

organisational strategic issues.

What was done

In early 2002, Executive Board considered substantial changes to the department’sorganisational structure and strategic ocus, drawing rom its own identication o problemsand rom results o the 2001 sta attitudinal survey.

Recognising the major scope o the changes, and their likely impact on sta, the ExecutiveBoard wanted to get it right. As a result, consultants were engaged to workshop the rangeo organisational issues identied and possible solutions, consulting widely throughout thedepartment.

During these workshops, executive level sta expressed particular concern aboutaccountability responsibilities which fowed rom the changed roles o SES Band 2 sta.

Reporting lines were changed to take account o these concerns.



75

Te workshops also revealed continuing concerns regarding communication within the

department, resulting in greatly improved sta access to supervisors as well as generally

better communication arrangements within the department.

Summaries o issues discussed in Executive Board are now regularly communicated through

sta notices and on the intranet, and minutes o meetings are also made available to sta.

Monitoring

During and ater the changes instituted in 2002, ongoing sta attitudinal surveys (conducted

every second year since that time) and sta consultation ensured that eedback would be

incorporated into the implementation o the organisational restructure and improved

strategic ocus.

A urther review was commenced late in the 2006–07 nancial year and appropriate

implementation and communication will ollow.

Benets

Te expansion o Executive Board, and improvements in its meeting structure, ensured

a wider perspective and a longer-term, strategic approach to issues. Tese changes provide

clearer guidance to sta on priorities and expectations and an opportunity to include a

broader range o SES employees in the strategic management process than had previously

been the case.

Tese changes were important elements in recognising the value and contribution o senior

sta to the department’s ability to deliver on its mission statement.A recent departmental sta survey recorded a more positive response to issues such

as leadership, accountability and roles and responsibilities than had been recorded prior

to the changes.

Key messages

1. Making changes to departmental structural and organisation arrangements can

greatly increase the ability o senior managers to consider broad, uture-oriented,

strategic and cross-group issues.

2. Removal o the divisional structure in a department can lead to greater work

eciency and productivity, encourage the devolution o responsibility, bring about

greater clarity o sta roles and responsibilities, and increase the attractiveness

o the department to prospective and current sta.

3. Movement to a strategic management approach and more fexible organisational

structure can encourage sta accountability and acceptance o change.



76

The Australian Agency for International Development(AusAID)

HowtheAustralianGovernmentagencyresponsibleformanagingAustralia’soverseas

aidprogramrespondedtoasignicantlychangedoperatingenvironmentthroughamajortransformation.

The agency

Te Australian Agency or International Development (AusAID) plans, coordinates and

manages the Australian Government’s overseas aid program. AusAID’s objective is ‘to assist

developing countries to reduce poverty and achieve sustainable development, in line with

Australia’s national interest’. AusAID:

• workswithgovernmentsofselecteddevelopingcountriestoassistthemstrengthentheir

own institutions and deliver essential services;• workswith,andcontributesfundsto,multilateraldonors(e.g.WorldBank,WorldHealth

Organisation,UNICEF),non-governmentorganisations(e.g.WorldVision,Oxfam,

CARE), and volunteer programs (e.g. Australian Business Volunteers, Australian

Volunteers International);

• contractsinexpertisefromAustralianandinternationalcompaniestodeliveraidprojects;

and

• respondstohumanitariandisasterswithnancialassistance,on-the-groundsupportand

coordination activities.

AusAID has approximately 1,300 sta—700 in Canberra and approximately 600 overseas inover 30 dierent locations. Te agency has a diverse workorce, with sta engaged under a

range o dierent employment modalities—e.g. Australian public servants, contractors,

specialist advisers and program managers and locally engaged sta (engaged overseas in

accordance with local labour laws). Sta based overseas work in a range o dierent locations

including High Commissions/Embassies, stand-alone oces and co-location with other

donors and/or with partner government agencies.

The challengeAusAID is undergoing a major transormation, which is being driven by two signicant

developments in the agency’s operating environment. Tese are:

• afocusonimprovingaideectiveness,particularlythroughhowaidisdelivered,and

• asignicantlyincreasingaidbudget.



77

Improving aid effectiveness

Australia, through its own experiences in Asia and the Pacic and broader international

experience, has learnt important lessons about improving aid eectiveness. A key lesson has

been that closer engagement with partners in aid delivery increases the eectiveness o aid.

Drawing on this experience, AusAID is shiting away rom ‘traditional’ projects managed by

contractors to working more closely with partners in delivering aid. Tis has included anincrease in working through partner government systems—AusAID ocers are oten

co-located in partner agencies to jointly design, implement and evaluate programs. Te

agency is also working more closely with other donors to ensure better harmonisation o aid

activities. Sector Wide Approaches, which involve working jointly with partner governments

and other donors in a particular sector, are also being used more widely.

Signicantly increasing aid budget

In 2007-2008 Australia is estimated to have provided $3.2 billion in Ocial Development

Assistance (ODA), representing 0.3 per cent o Gross National Income (GNI). TeGovernment has committed to signicantly increasing the aid budget to 0.5 per cent o

GNI by 2015.

Te signicant increase in the aid budget over the next six years coupled with the shit to

new ways o delivering aid presents major challenges or the agency. A ‘partnership’ approach

to aid delivery is more complex and it is more dicult to measure the direct impact o

Australian support. At the same time, the proposed increases in the aid budget will require

signicant up-scaling o programs—this is likely to attract increased scrutiny and urther

pressure to demonstrate results/eectiveness.



78

o operate eectively in this new environment it was evident that the agency would require:

• anexpandedpresenceoverseaswithanincreasednumberofAusAIDstadirectly

involved in delivering aid (including being co-located in partner government agencies

jointly designing, managing and evaluating programs);

• stawiththeskillsetstomanagenewwaysofdoingbusiness;

• improvedcapacitytomeasureperformance/resultsinamorecomplexoperating

environment;

• stronggovernanceincludingchangemanagement;and

• astrongcorporatespinetosupportthedeliveryofaneectiveaidprogram.

The strategy

In 2007, in response to the enormous challenges acing the agency, AusAID’s Director

General released a ‘blueprint’ outlining how the agency would meet the challenges o a

signicantly increased aid program by 2010. Te AusAID 2010 - Director General’s Blueprint

built on the direction o previous policy statements and the 2006-2010 Agency Business

Plan to provide a broad institutional picture o how the agency would unction as it sought

to deliver a signicantly increased aid program. While AusAID 2010 was initially targeted at

the previous Government’s policy to double the aid budget by 2010, the document

(including updates and implementation plans) has provided the basis or delivering on the

current Government’s commitment to increase ODA to 0.5 per cent o GNI by 2015.

What was done

Under AusAID 2010 , the agency embarked upon a program o staged restructure to betterposition it to meet the challenges o the new operating environment. Te revised structure

addressed a recognised need or AusAID to have a strong centre in Canberra that sets the

strategic directions or the program and agency, supports the aid delivery unction and

manages the risks posed by the shit to a predominantly oshore operating state.

Central to the new structure was a signicantly expanded role or country oces. Tis

included the devolution o activity management rom Canberra1 and a greater role or policy

engagement with partner governments and other donors. Te expanded role or country

oces has resulted in a changing sta prole or the agency with a signicantly increased

number o sta located in-country.2

o strengthen the aid program’s access to sectoral expertise, a range o technical/thematic

groups (e.g. health, economic, gender, education, rural development, inrastructure,

governance, environment etc) were established. In addition to providing technical support,

the thematic groups play a critical role in ensuring the contestability o program design and

review.

1 While devolution o activity management to country oces had commenced a ew years earlier, AusAID 2010 provided both

a strategic ramework and the systems and support or devolution to be rolled out across the aid program.

2 In 2004 AusAID had 60 A-based sta (diplomatic) overseas with approx 250 overseas based (O-based); in 2007 AusAID had

approximately 160 A-based overseas (mixture o diplomatic and in-line advisory positions) and approximately 350 O-based.



79

An Oce o Development Eectiveness (ODE) was also established within AusAID to

monitor program quality and eectiveness and provide robust assessment and review

processes. ODE reports directly to the Director General and is oversighted by a

Development Eectiveness Steering Committee (DESC) comprised o the Deputy

Secretaries o key Australian Government agencies.3

ODE prepares an Annual Review o Development Eectiveness report which assesses the eectiveness o all Australian overseas

development assistance. Te report is publicly available and is an important mechanism or

ensuring the transparency and accountability o the aid program to Australian taxpayers.

Governance arrangements and corporate systems

Tese structural changes have been accompanied by the strengthening o the agency’s

governance arrangements and corporate systems and processes. Although a work in progress,

some changes have already been made to ensure the agency is well placed to support the new

operating state. Tis includes establishing or revamping a number o internal management

committees to guide the reorm process and support program delivery. Tese include:

• ExecutiveCommittee-responsibleforguidingtheagency’soverallpolicydirectionand

relationships;

• ProgramCommittee-responsibleforstrategicoversightofprogrammanagementand

perormance;

• AuditCommittee-responsibleforlegislative,corporategovernance,riskmanagement

and nancial responsibilities;

• ResourcesCommittee-responsibleforcross-agencyanalysisofnancial,humanand

physical resources;

• PlacementsCommittee-responsibleforrecommendingstaplacementsinCanberraand

postings overseas; and

• InformationandKnowledgeManagementCommittee-responsibleforidentifyingand

developing policies and practices that support eective inormation fows and knowledge

management.

In addition to AusAID’s governance committees, the agency has planning and procedural

mechanisms to support operational needs. Te strategic planning ramework is based on the

2006-2010 Corporate Plan and 2006-2010 Agency Business Plan. Work is currently

underway to update these key strategic documents to refect the new operating state.

Business unit plans and individual perormance plans are aligned to these high levelplanning documents.

Over the past eighteen months improvements have been made to business unit planning and

review processes, strengthening the linkage between strategic priority setting and resourcing,

and adopting a stronger results orientation. Te processes will be urther reviewed ater each

cycle to ensure continuous improvement. AusAID’s approach to individual perormance

management has also been revamped, with the new process having a stronger correlation to

strategic planning processes.

3 Prime Minister and Cabinet, Foreign Aairs and rade, reasury, Finance and Deregulation



80

Te agency’s corporate enabling unctions have/are being enhanced to support an expanded

aid program with a signicant overseas presence. For example:

• adedicatedcorporateenablingdivisionhasbeenestablishedtostrengthentheagency’s

operations in Canberra and overseas;

• designatedcorporatepositionshavebeencreatedforalllargeoverseasocesincluding

PortMoresby,Suva,Honaria,JakartaandBangkok;

• aworkforceplanningstrategyisbeingdevelopedtoensuretheagencyisplanningforits

uture human resources needs;

• traininganddevelopmenthasbeenre-orientatedtomeetthenewoperatingstateand

includes a core o mandatory training modules on leadership/management and nancial

management;

• nancialpolicieshavebeenrened/improvedtoincreaseaccountabilityandtransparency;

• whileensuringallsta,bothinCanberraandoverseas,haveaccesstoacommonsuiteof

desktop I services continues to be a challenge, progress is being made, albeit more slowly

than originally anticipated; and

• theagency’spropertyandsecurityareashavebeenexpandedinresponsetotheneedto

post a larger number o sta overseas.

Finally, a high priority or the agency has been to ensure it has a consistent set o core

business processes that are appropriate or the new operating environment. Following a

review, the agency’s business processes have been streamlined and simplied to support

delivery o an aid program that is higher volume, better quality and more devolved. A range

o processes are being mapped and released to provide sta with the minimum, mandatory

set o processes. Rigid quality assurance, peer-review and user-testing methodology are being

applied to these core processes. Te result is a standardised, quality controlled set o simple

instructions with mandatory steps that apply to all sta in all locations. Examples o

processes that have been released include: designing an aid activity; spending public money;

and individual perormance management. Tese processes manage risk, assure quality,

increase eciency and meet the needs o a mixed workorce in several global localities with

cultural and language diversity.

Monitoring

AusAID’s Corporate Reorm Section has primary responsibility or monitoring AusAID’s

progress towards its new operating state. Te section regularly tracks the agency’s reorm

activities, and plays a key role in capturing important lessons that have been learned across

the organisation. It also provides analysis and recommendations to the Executive and line

managers on appropriate reorm approaches.

ODE has responsibility or reporting on the eectiveness o the aid program as well as

building the capacity o Australian agencies delivering aid to manage on the basis o results.



81

Benets

AusAID’s new operating state will allow the agency to:

• serveitsMinisterandtheGovernmentbyleadingtheformulationofwhole-of-

government policy and strategic advice on international development issues, and by

working collaboratively with other Government agencies, Australian institutions and

international development organisations in the provision o aid;

• contributetolastingdevelopmentresultsbydesigninghigh-qualityprogramsof

assistance within well-targeted country and thematic strategies and implementing such

programs eciently and eectively; and

• value,supportandinvestinitspeopleandsupportiveinstitutionsinordertomaintain

high-calibre policy, technical and corporate capabilities.

Key messages

1. Change Management Strategy—critical to re-orientating the agency to the new

operating state was having an overarching strategy/plan or the change. AusAID

2010 (including updates and implementation plans) was invaluable in providing a

‘blueprint’ or transorming the agency to deliver on an expanded and more

complex aid program. By providing the context or the transition, it was also

pivotal to ensuring sta understood and were actively engaged in the change

management process.

2. Organisational culture and values—AusAID was able to adapt best where it built

on the strengths o existing systems and processes. By changing incrementally andbuilding on what was already being used, rather than throwing out old practices in

order to replace them with something completely dierent, AusAID achieved a

smoother transition. A radical transormation would have required more time and

resources, and introduced additional risks.

3. Stakeholder expectations—change had to happen while AusAID continued to

deliver the aid program. It was benecial to actively manage expectations o

stakeholders while change occurred. In many cases, stakeholder expectations were

a driver or change. AusAID incorporated stakeholder expectations into its

governance ramework and through the work o the DESC.

4. Communication—important, or success, at every level o the organisation and at

every stage o the process. Best results were achieved when AusAID

communicated:

•withconsistent messages;

• constantly ;

• consultatively ; and

• (provided)context .



83

Appendix A

ANAO’S ‘HOUSE OF PUBLIC SECTOR GOVERNANCE’14

Source: Adapted rom a model developed by the Queensland Department o ransport in its Corporate Governance

Framework or Queensland ransport and Main Roads: Final Report ,July2001.

46 ANAO, 2003, Public Sector Governance, Volumes 1 & 2: Better Practice Guide , Commonwealth o Australia, Canberra, p. 14.


Confidence in the organisation

Review and Evaluation of Governance Arrangements

Information and Decision Support

Internal

Conformance

&

Accountability

Planning &

Performance

Monitoring

External

Conformance

&

Accountability

Risk Management

Stakeholder Relationships (External & Internal)

Leadership, Ethics and Culture - Commitment to Good

Public Sector Governance

Governance Outcomes:

46



85

Appendix B

GOVERNANCE AND PLANNING MODEL

Audit Committee

ICT Committee

People

Management

Committee

Workplace

Relations

Committee

Security

Committee

Secretary

Senior

Executive

Committee

ProgrammeStatements

Reporting against

agreed standards

Corporate

Priorities

Divisional/Regional

Business Plans

Senior

Management

Committee

OH&S

Committee

THE WORKOF THE

DEPARTMENT

Audit and Assurance Activity



87

Appendix C

EXAMPLES OF INTERNAL GOVERNANCE STRUCTURES

Department of Education, Science and Training*

* accurateasatJune2007

** Te National Yarrangi Steering Committee is the consultative group within DES that leads the developmento Yarrangi, DES’s Aboriginal and orres Strait Islander Australian Recruitment and Career Development Plan.

Secretary

Executive

Corporate

Leadership Group

Audit and Business

Assurance Committee

Education and

Training QualitySystems Committee

ImplementationSub-Committee Corporate ITCommittee

Information and

Business TechnologyCommittee

National Office

Accomm. Project

Steering Committee

People and

Leadership

Committee

Network

Management

Committee

Business

Continuity

Committee

Security

Committee

Strategic

Consultation

Committee

National Yarrangi

Steering

Committee**



88

Department of Immigration and Citizenship*

*accurateasatJune2007

Secretary

Executive

Management

Committee

Change Management

Steering Committee

Corporate Leadership

Group

Management Committee

Departmental Audit

and Evaluation

Committee

Values and Standards

Committee

People Management

Committee

Fraud, Integrity

and Security

Committee

Systems Committee

Systems Boards

Performance

Management

Boards

Departmental Performance



89

Department of the Environment and Water Resources*


Secretary

ExecutiveRoundtable

Budget, Finance andStrategy Committee

ComplianceExecutive

Senior ExecutiveManagement

Meeting

Audit CommitteeIndigenous PolicyLeadership Group

KnowledgeManagementCommittee

Marine and CoastalCoordinationCommittee

WorkforceManagementCommittee

InternationalSteeringCommittee



90

Department of Transport and Regional Services*


Audit Committee

Occupational

Health & Safety

Committee

Strategic IT

Committee

People

Management

Committee

Departmental

Consultative

Committee

Departmental

Security

Committee

Secretary

Business Meeting

Executive

Management

Team

SES Management

Team

SES Strategic

Planning Forum

Secretary’s



91

Department of the Treasury*


Secretary

Secretary

ExecutiveDirectors

GeneralManagers

UnitManagers

AuditCommittee

StaffingCommitteeGeneral Executive

Managementmeetings

Divisionalmeetings

Executive Board



Department of Veterans’ Affairs*


Secretary

Resources

Committee

Information

Committee

Financial

Compliance

Sub-Committee

Operations

Committee

Integrity & Risk

Committee

Collegiate

Staffing

Committee

Curam (integrated

ICT application

development)

Project Board

Business

Architecture

Committee

Executive

Directors

Audit

Committee

Executive

Management

Group

better governance

Documents