Leadership is critical for the sector to deliver to the community

As public expectations of government services increase, the ability to make the most of opportunities and respond effectively to current and emerging challenges is critical: the best services require the best leaders. Leadership is central to delivering high-quality services to the community; it influences all of the factors that characterise a high-performing organisation and is central to achieving positive workforce outcomes across the sector.

Last year’s State of the Sector Report highlighted the sector’s commitment to creating leaders skilled in strengthening their agency’s culture of customer focus, collaboration and innovation. Senior executive reform provided the opportunity for change. The Leadership Academy is now growing the skills base necessary to lead a culture of high-performance.

“Leaders today must be visionary, inspire direction and purpose and drive results,” Premier Mike Baird said in a speech to leaders in the sector in July 2016. “They must act with integrity, and display resilience and courage ... The first step is for sector leaders to reflect on their organisation’s capabilities, talent and culture, and consider the workforce management strategies they need to drive the best business outcomes.”

This chapter discusses how leadership is changing in the NSW public sector. Leaders’ strengths and their challenges are analysed from employee, customer and agency perspectives. The importance of building leadership diversity and a pipeline of future leaders is also discussed.

Reforms have enabled a shift to a leaner leadership group

Reform in the public service has streamlined senior executive reporting layers from between six and seven to four. There are now 11% fewer executives in the public service since reform implementation commenced in 2014; increasing their impact, but also the demands on them to drive a change agenda.

Figure 2.1: Reduction of total public service executive numbers since reform implementation, headcount at census date, 2014–2016

Figure 2.1: Reduction of total public service executive numbers since reform implementation, headcount at census date, 2014-2016

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2014 2015 2016
Headcount 2178 2026 1938

Source: NSW Workforce Profile 2016

With the passage of the Government Sector Employment Legislation Amendment Act 2016, executive structures in the transport, health and police services will soon have some alignment with the reformed public service structure. This employment architecture had its origins in the 2012 Commission of Audit and provides an improved system for mobility and development.

The past three years of reform show the number of public service senior executives now employed under the GSE Act is at 64%, from 1% in 2014, its first year. The remaining 36% will transition by February 2017.

Figure 2.2: Proportion of public service senior executives now under GSE Act 2013 provisions, headcount at census date, 2014–2016

Figure 2.2: Proportion of public service senior executives now under GSE Act 2013 provisions, headcount at census date, 2014-2016

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2014 2015 2016
GSE Act 1% 19% 64%
Other Acts 99% 81% 36%

Source: NSW Workforce Profile 2016

The change in leadership, both in personnel and in structure, has also resulted in a new leadership profile. Anecdotal evidence suggests that as many as 30% to 40% of executives are new to the sector since 2014.

Agencies report that these new recruits contribute fresh thinking and established skills in many of the new workforce management practices, but require some support in learning the machinery of government.

Leaders are also changing the way they work and think. Past boundaries are evolving towards a focus on the ‘joined-up’, which refers to departments coordinating with each other to produce an integrated, seamless service.

While managing people and driving cultural change are important leadership goals within an agency, there is also the need to work collaboratively across the sector in order to achieve set outcomes. The Secretaries Board, which comprises the cluster secretaries of 10 departments and the Public Service Commissioner, has emphasised the need for leaders to work effectively between departments. This has been further emphasised by the Board’s response to overseeing implementation of the Premier’s Priorities.

This broader thinking is starting to drive collaboration across the sector in initiatives such as place-based services. These use data-driven approaches to find integrated solutions that are jointly designed with the communities they will serve, and delivered with Commonwealth agencies and non-government organisations (NGOs).

Customer service, collaboration and innovation are leadership strengths

Clear strengths in customer service – and to a lesser extent in collaboration and innovation – have been identified from employee, customer and agency data.

Customer focus

One of the Premier’s Priorities is to improve customer satisfaction within key government services every year in this term of government. Employees view customer focus as an area in which leaders are performing relatively well compared to other senior manager-related questions in the People Matter survey (60%).

80% of employees report that in their agency, efforts are being made to match services to customer/client needs. Agency data supports this, with 74% of customer-facing agencies reporting that they have mature practices in using customer insights to drive their service design, including customer feedback to design new or improved services. 60% of agencies also have mature practices in using customer feedback to identify the knowledge and skills development their workforce requires.

Agencies report that leaders have driven a key shift in mindset within their organisations to focus more on the customer experience. Leaders with private sector and NGO experience have contributed valuable skills to this shift.

Figure 2.3: Employee perceptions of senior leaders – customer, innovation and collaboration

Employee perceptions of senior leaders - customer, innovation and collaboration

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  % agree
Senior managers communicate the importance of customers in achieving our business objectives  60
Senior managers promote collaboration between my organisation and others we work with  52
Senior managers encourage innovation by employees  49

Source: People Matter Employee Survey 2016

While the sector data supports this, what do customers think? Customer satisfaction for NSW government services, polled annually via the Customer survey, improved significantly to 7.5 out of 10 for both consumers and businesses in 2016 from 7.3/7.2 respectively in 2015. Particular improvements were noted in satisfaction for employees and business processes.

Customers rate the quality of the employees and their ability to focus on addressing customer needs higher than the processes that support them. This may mean that employees are meeting customer expectations in spite of, not because of the underlying processes they use. Further, while customer scores for the ability of employees to see things from the customer’s perspective and get things done quickly have improved the most of all scores in this survey, indicating the work the sector has done, these scores remain among the lowest overall. Re-designing processes to make them streamlined, centred on the customer and connected will be necessary to improve customer satisfaction further. This will be a challenge for leaders going forward.

Innovation and collaboration

Leaders play a pivotal role in fostering a culture of innovation and collaboration. 49% of employees agree that their leaders encourage innovation. Two-thirds of agencies report their leaders empower their staff and partners to innovate to improve services, with 52% reporting mature supporting structures and 43% having mature practices to allocate people and resources to facilitate ongoing innovation.

Agencies report leaders are seeking alternative approaches to delivering services and ensuring that organisational success metrics set do not encourage a culture of ‘business as usual’. To further promote innovation, agencies report hosting hackathons, dragon’s dens, boot camps and investment panels to encourage a culture of innovation. Leaders are beginning to encourage a culture of taking some risks and testing ideas.

77% of agencies report that their practices for identifying and acting on opportunities to collaborate are mature. They report broad rates of collaboration with other NSW agencies in policy development (84%) and with the private sector in service delivery (75%), and consistently rate collaboration as one of their key organisational strengths.

Collaboration starts at the executive level, with leaders demonstrating shared accountability and decision-making. For some agencies, collaboration and partnerships are becoming standard, although they report the need for more skills in working effectively with external partners.

Other leadership capability data sources show working collaboratively across portfolios is an emerging strategic policy development strength for leaders, supporting the Agency survey.

52% of employees agree their leaders promote collaboration. This was found to be a key driver of employee engagement in 2016, discussed further in Chapter 5.

Although these are positive developments, more collaboration and innovation across agencies, clusters and sectoral divides is needed. Improvements have been rapid since 2015, and continue at a fast rate.

People leadership and change management remain a challenge

Low scores from employees indicate that senior leaders are not effective in change management and leadership of people, particularly communication – two significant drivers of employee engagement. Change management refers to the management of large reform and transformation programs, as well as restructures and other organisational changes.

People leadership

Articulating a clear future focus for an agency and managing the workforce to drive stronger organisational capability are at the heart of leadership. However, employee scores for senior managers in the way they communicate, listen and champion future directions were low. 47% of employees believe that their senior manager provides clear direction for the organisation’s future, although 62% believe their organisation is future-focused. 39% of employees believe their senior managers listen to them, and 44% agree that they keep them informed about what is going on.

NSW leadership development programs have also identified these characteristics as development areas for leaders, along with the ability to inspire direction and purpose, clearly communicate a vision and strategy, create confidence and trust in the future direction of the organisation and promote understanding throughout the agency.

Agencies recognise this gap. Nearly half of all agencies (49%) report that building leadership capability is one of their core priorities for the next year. Much work is also being done to develop core people management skills at earlier career stages. 79% of agencies provide people management training and development for front-line service managers. 76% of agencies offer development for staff seeking managerial roles, and 68% offer leadership skills for high-potential employees not currently in leadership roles. Agencies recognise the challenge in building leadership skills at lower levels, and have the plans in place.

Figure 2.4: Employee perceptions of senior leaders–change and two-way communication

Figure 2.4: Employee perceptions of senior leaders/change and two-way communication

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  % agree
I believe senior managers provide clear direction for the future of the organisation  47
I feel that senior leaders effectively lead and manage change  43
I feel that senior managers keep employees informed about what's going on  44
I feel that change is handled well in my organisation  41
I feel that senior managers listen to employees  39

Source: People Matter Employee Survey 2016

Managing change

43% of employees agree that senior managers lead and manage change effectively, while 30% actively disagree with the statement. 41% say their organisation handles change well – largely similar to the 2014 result (44%).

While agencies report that the pace of change has slowed (with 50% reporting a restructure, 10 percentage points down from the previous year), agency confidence in their change management practices decreases as the processes become more complex.

61% of agencies have mature change agent networks or change champions to see through initiatives, and just over half consider their change leadership strategies are mature (55%). 39% of agencies are confident they are mature when it comes to assessing whether their organisation is ready for change before undertaking it.

Agencies rate their evaluation practices as less mature. While it is possible that the success of a change initiative is captured via other project-based evaluations, 25% of agencies report mature practices for assessing managers on how successfully they lead change, and 27% regard themselves as mature in assessing the success of a change at the local level.

It is possible that to gain traction with employees, agency change management practices may need to be at the highest levels of maturity.

Figure 2.5: Maturity of agency change management practices

 Figure 2.5: Maturity of agency change management practices

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  % Mature
Face-to-face communication between senior managers leading the change and affected employees  85
Tailored communications for employees affected by the change to support change initiatives  82
Processes to identify impacted stakeholders (e.g. stakeholder mapping)  70
Change management plans and change impact assessments that include a link with agency objectives  64
Training programs for employees affected by the change to support change initiatives  62
Resources such as change champions and/or change agent networks to support transition and encourage input  61
Strategies for change leadership that detail how leaders will communicate the change, evaluate progress and assess employee engagement  55
A formal mechanism for assessing change readiness before the action plan is implemented  39
Formal mechanisms to monitor the success of the implementation of the change at the ‘local’ level (specific affected area)  27
Managers are assessed on their success in managing change  25

Source: Agency survey 2016

Some clusters are ahead in their change and reform journeys. For clusters at earlier stages, the response of their leaders in proactively driving change will be critical to avoid errors and grow change capability throughout the organisation.

Building a leadership pipeline is an emerging priority

A key consideration for operational leaders is ensuring they invest time in developing the talented high performers they already have. This works as a retention strategy for high- performing and high-potential people, given that career development is a key driver of employee engagement, and also a way for agencies to develop their own future leaders.

Agencies report, however, that succession planning in leadership remains a challenge, generally as a result of a limited data on capability. While 57% have mature processes for identifying executive high-performers and potential leaders, only 44% report having this data about employees at the next level down1. Many agencies reported in discussions that the leap in leadership skill required from this band to the executive level is large, and they are working to map the transition required in agency knowledge and skills.

34% of agencies report having mature strategies to manage their top performers and potential leaders, a significant improvement on the 8% reported in 2014. However, the emphasis of these strategies is on recruitment and development rather than building leadership pipelines, planning for critical roles or talent retention.2

Smaller agencies (with up to 1,000 Full-Time Equivalent employees) reported that the costs and resources required to build leadership capability remains a challenge. 42% of agencies consider that their capacity to provide on-the-job development experiences as their most significant challenge to implementing a talent strategy.3

This emphasises the potential benefits of mature mobility practices for current and future leaders. Internal mobility practices are assessed as mature by 68% of agencies, but only 17% say they are mature in using a sector-wide approach. Taking a sector-wide approach may involve accessing databases of candidate profiles from across the sector (known as a ‘talent pool’) or ensuring that leaders actively support employees looking for work outside their current area. While agencies verbally report that they increasingly look beyond traditional internal development pathways, these processes remain more ad hoc than systematic.

One in three agencies report that enhancing the maturity of their talent management practices is an organisational priority over the next year.

Spotlight on leadership transitions: Department of Industry

In late 2015, the Department of Industry, Skills and Regional Development commenced consultation on a leadership-specific framework to define the values, capabilities, behaviours and supports required to be a successful leader at the Department. The resulting Framework is composed of five key leader behaviours, leader success profiles, and pathways for leadership development.

The senior executive leadership cohort contributed to defining Industry’s leader behaviours, which align with the department’s values, articulating how leaders work, interact with each other and make decisions. In May 2016 a leadership pulse survey was initiated, which asked leaders to reflect on how well they were performing against the behaviours and invite their direct reports to do the same. The feedback gave leaders insight into which aspects of their leadership style could be improved or enhanced. Opportunities for development are supported by information about best practices, and suggested actions that leaders can take.

While the process is still at an early stage (with a repeat survey planned for late 2016 to measure change/ improvements) the executives have been able to use the feedback to explore what is expected of them and how they can work together more effectively across the executive cohort. They were encouraged to share results with their teams as a way to build a culture of honest feedback, learning and growth. Industry plans to extend this tool down to team leader level in 2017.

The leader profiles and pathways for leadership development were designed in consultation with the senior executive, and released after the leadership pulse survey was implemented.

The pathways articulate the shifting technical and leadership capabilities required from a new line manger to a senior executive. It identifies the skills development necessary to successfully make each transition, and provides a suggested development plan based on the education, experience and exposure opportunities that could be used to reach it.

In addition, the Department rolled out leader profiles clarifying the department’s expectations of its leaders. The profiles provide a foundation for dialogue between leaders for performance and development discussions.

Whether they are leading self, teams, managers or executives, feedback to date indicates that leaders value being able to steer their development, and prepare for what is next in order to deliver the department’s priorities.

Leadership diversity is a work in progress

A public sector that understands its community is critical to meeting that community’s needs, and agencies with a range of perspectives and talents are better placed to achieve this objective. The Premier’s Priority on driving public sector diversity sets two goals to be achieved across the government sector by 2025:

  • double the number of Aboriginal and Torres Strait Islander people in senior leadership roles to 114
  • increase the proportion of women in senior leadership roles to 50%.

Agencies report that the priority has had a galvanising effect, focusing attention and effort on pipeline planning and deciding whether incremental targets are required.

Aboriginal and Torres Strait Islander leadership progress

The current Aboriginal and Torres Strait Islander leadership representation indicates there will be some challenges in meeting the Premier’s Priority goal across the government sector. Education and Transport made notable progress in 2016, while other agencies have seen a decline in headcount because of exits and movements between agencies.

Figure 2.6 Progress towards Premier’s Priority of 114 Aboriginal leaders by 2025 across government sector

  2015 headcount 2016 headcount Change
Education  18  29  11
Family & Community Services  8  5  -3
Finance, Services & Innovation  3  3  0
Health  3  4  1
Industry  1  1  0
Justice  17  13  -4
Planning & Environment  0  0  0
Premier & Cabinet  3  2  -1
Transport  2  5  3
Treasury  0  1  1
Total 55 63  

Source: NSW Workforce Profile 2016

In addition to the Premier’s Priority goal, NSW has adopted an aspirational goal of 1.8% Aboriginal and Torres Strait Islander representation in each salary band. This was introduced after NSW successfully achieved the 2.6% representation goal set by the Council of Australian Governments by 2015, but found representation was not evenly distributed throughout the workforce. Achieving the 1.8% goal is broadly expected to provide a pipeline that will help to meet the Premier’s Priority goal, and will result in an overall level of representation of 3.3%.

Analysis of the number of leaders across the sector suggests that as leadership headcounts change, Aboriginal and Torres Strait Islander representation will move in the same direction. If growth in leadership is expected to be limited in the near-term, then improving Aboriginal and Torres Strait Islander representation at senior leader levels will require careful consideration.

However, agencies are less confident about the maturity of the practices they have in place to achieve both goals. 29% of agencies report their practices to meet the 1.8% target are mature, unchanged from 2015, and 31% rate their practices to meet the Premier’s Priority as mature.

The Aboriginal Career and Leadership Development Program was introduced in 2015 as part of the strategy to build a pipeline of future Aboriginal and Torres Strait Islander leaders. There have been 100 graduates from the program to date, and when surveyed, 54% of respondents reported achieving career development opportunities, including promotion (27 of 50 respondents).

Women in leadership progress

At a sector level, women currently comprise 36% of senior leaders, although at the cluster level there is a wide range of results. Reflecting this, just over one third of agencies (34%) reported that they will not need to set targets to meet the Premier’s Priority. 16% have set targets, 21% were currently analysing their workforce to determine necessity, and 29% had not commenced their analysis at the time of the survey (July 2016).

Figure 2.7: Percentage of women in senior leader roles by cluster

Cluster 2014 % Female 2015 % Female 2016 % Female
Education  46%  47%  52%
Family & Community Services  58%  57%  60%
Finance, Services & Innovation  34%  34%  36%
Health  36%  37%  39%
Industry  37%  39%  38%
Justice  24%  24%  25%
Planning & Environment  35%  34%  37%
Premier & Cabinet  48%  47%  51%
Transport  20%  21%  22%
Treasury  36%  38%  37%
Sector average  33%  34%  36%
Total number 2,520 2,517 2,795

Source: NSW Workforce Profile 2016

When employees were asked whether gender was a barrier to success in their organisation, there was almost no difference between men and women’s responses to this question (with 74% agreeing that it was not). However, when asked whether senior leaders support women’s career advancement, just over half of employees (54%) agreed, and analysis shows that men and women replied to this question quite differently. There was a gender divide between men and women’s responses in all clusters, even those where women represent more than 50% of leaders. However, this divide is larger in those clusters with relatively fewer women in senior leader roles.

Figure 2.8: Percentage of men and women who believe senior leaders support women’s career advancement

  Male Female
Sector average 56.9% 53.7%
Education 65.7% 63.4%
FACS 55.7% 52.7%
Finance 60.5% 57.0%
Health 52.8% 49.1%
Industry 58.2% 51.2%
Justice 57.1% 49.1%
Planning 63.2% 55.2%
Premier 62.5% 59.8%
Transport 52.4% 48.3%
Treasury 70.2% 60.0%

Source: People Matter Employee Survey 2016

At the executive level, the data shows that while fewer women than men are applying for senior roles, they are more likely to be successful when measured by gender as a percentage of total applications made.

To address the disparity in application rates, guidelines were developed to eliminate bias in recruitment processes using behavioural economics techniques. The guidelines note the value of careful wording in job advertisements in areas where women are historically underrepresented, and using personalised messages for targeted groups4. A number of clusters noted they will soon start to use these techniques to encourage more applications from women and other underrepresented groups.

Additionally, the Leadership Academy set a goal of 50% participation by female leaders in its programs. This goal has been easily achieved to date, with 105 women participants out of 171.

Figure 2.9: Gender comparison of senior executive role applications and appointments, 2014–2016

 Figure 2.9: Gender comparison of senior executive role applications and appointments, 2014-2016

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Submitted applications by gender
Male Female
2014 66.6% 33.4%
2015 71.6% 28.4%
2016 70.5% 29.5%
Successful rate by gender
Male Female
2014 3.0% 4.8%
2015 3.9% 6.1%
2016 3.1% 5.0%

Source: I work for NSW recruitment data


Notes

1 Agency survey 2016

2 ibid

3 ibid

4 Behavioural Approaches to Increasing Workforce Diversity, NSW Premier and Cabinet Behavioural Insights Unit, August 2016