The publication of this year’s State of the Public Sector Report coincides with the fifth anniversary of the establishment of the office of the Public Service Commissioner. This five-year period has been one of transformational change in workforce management in the NSW public sector, underpinned by the recommendations of the Schott Commission of Audit in 2012 and taken forward by the dedicated focus of both the Public Service Commission (PSC) and the Secretaries Board. Reviews undertaken last year, by both the Commission itself and the Auditor-General, confirm the soundness of the reform directions and the very solid progress in their implementation.

So, five years in, what has changed? Well, our workforce looks a little different in a number of ways: there have been modest overall reductions in the size of the workforce as a whole while the number of employees in certain occupational groups (teachers, nurses and police) has increased. As a share of the total NSW workforce, the public sector has been decreasing steadily for the past five years; it is now at 10.3%, down from a high of 11.4% in 2006. We also have leaner, flatter executive structures.

And we have some encouraging signs in some areas of workforce diversity. Our overall level of Aboriginal and Torres Strait Islander representation in the workforce is improving and there has been some positive progress in addressing under-representation in some salary classifications. There is good early progress in meeting the target in the Premier’s Priorities of doubling Aboriginal and Torres Strait Islander senior leaders in the sector by 2025.

The Premier has also committed to the sector achieving gender parity in the senior leadership ranks by 2025. Some good early progress has been made against this target and there is an emerging understanding in each cluster of the talent pipeline that exists today and what is required to convert that potential into a gender-balanced leadership cohort. Emerging work on increasing workplace flexibility will be critical to achieving this target.

Notwithstanding the solid progress above, there are other aspects of workforce diversity where redoubled efforts are required to turn around under-performance. This is notably the case in the representation and experience of people with disabilities in the NSW public sector. Overall, representation continues to decline and the experience of people with disabilities working in the sector is less positive than for those without a disability. A process jointly led by the Secretary of the Department of Family & Community Services and myself is working with peak disability organisations to inform a comprehensive response to this situation.

It is not only workforce demographics that have changed over the past five years. Workforce management systems and processes have been significantly reformed at every level. The transition to the new employment architecture as embodied in the Government Sector Employment Act 2013 (NSW) (GSE Act) is nearly complete; 64% of our public service senior executives are now working under the new arrangements, with the remainder transitioning by February next year. This means that the public service leadership structure is now leaner, flatter and more consistently designed across the sector, with consistent work level standards underpinning executive structures. Already we have seen an 11% reduction in the number of executive roles.

From 1 January 2017, alignment to GSE Act design principles will occur (as provided for in the Government Sector Employment Legislation Amendment Act 2016) in the executive structures of the Health Service and Transport Service and in parts of the Police service. This does not require restructuring of these services’ executives, but will complete a process that allows for better management of career pathways and development across the sector.

Our survey tells us that there is increasing maturity in many of the systems and processes that underpin the transition – performance management, workforce planning, agency rollout of the Capability Framework, new recruitment requirements and the use of workforce analytics. Tangible examples of this increasing maturity can be seen in a number of areas; this report showcases some of these initiatives, notably the whole- of-sector efforts related to our Information and Computer Technology (ICT) workforce.

While the above are all positive developments, there are areas that require attention; there is a concerning trend of increased unscheduled absence (including sick leave). The PSC will examine the underlying causes and recommend how the agencies respond.

Our employee survey tells us that employee engagement is steady and slightly up when compared to our first measurement in 2012; while it compares favourably to other jurisdictions, there is room for significant improvement, and a key expectation of Secretaries and other agency heads is to drive up employee engagement. The increased effort in developing workforce analytics has provided us with access to an evidence base that helps to direct efforts in each cluster to achieve the required lift.

Bullying rates continued to decline this year, making a significant decrease compared to 2012, both in terms of people directly experiencing bullying and those observing it. A roundtable chaired by the Commission and involving the public sector unions has resulted in work (both guidance and, in the near future, an educational toolkit) that is helping agencies to take action to further drive down the prevalence of bullying.

So, a lot has changed in five years: a new employment framework; new systems and processes to underpin best-practice workforce management; a significantly improved capacity to utilise workforce analytics to underpin agency practice; and, importantly, evidence of real results starting to emerge. However, there is always more to do and, in one key area, a need to energetically build greater capability: leadership.

Leadership matters. Whether it is in setting direction, in executing strategy, in shaping organisational culture, or in driving results, leadership is key. Data from this year’s agency employee survey show that there is considerable work to do in building the capacity of senior leaders in key areas: change management; communicating direction; listening to and involving employees in shaping organisational thinking and practice; and managing performance.

NSW has recently taken some very significant steps in having a properly structured approach to leadership development. The Leadership Academy, an initiative set up at the Premier’s request, identifies high-performing, high-potential individuals and provides them with structured, needs-based development at key career points. Over 170 people from across the sector have already participated in the pilot phase of this initiative, with new intakes now coming in each year. But this is only part of what needs to happen to develop deep and broad leadership capability across the sector.

Capability-based assessments that underpin the new recruitment model need to be optimised to ensure that all people being recruited into roles that lead people are equally strong in domain expertise AND leadership capability.

Performance management of people in leadership roles needs to properly reflect on how a person leads and where they need to develop in their craft.

Significantly more effort needs to be put into developing people by using the mobility provisions of the new employment framework. This will give people a breadth and depth of experience that assists them in being better leaders.

We need to see senior managers directing more of their efforts to communicating better with their staff.

This year we saw the NSW public sector listed for the first time in the top 20 employers of choice in Australia in the annual Randstad survey (a major international survey). This result would have been inconceivable with the workforce management arrangements that Dr Kerry Schott identified in her 2012 Commission of Audit Report. This year’s State of the Public Sector Report shows that there has been considerable progress in responding to the problems identified in that report and that agencies are now moving from first-phase reform to a more mature set of workforce management arrangements. While certain areas clearly require more effort to lift performance, I am confident that the sector’s leadership is tackling the right issues and is actively seeking to leverage the full potential provided by the reforms.

Graeme Head

Graeme Head

Public Service Commissioner