Public Sector IPANZ - September 2015 by Effigy Creative Pty Ltd

Volume 38:3 Publisher The Institute of Public Administration New Zealand PO Box 5032, Wellington, New Zealand Phone: +64 4 463 6940 Fax: +64 4 463 6939 Email: admin@ipanz.org.nz Website: www.ipanz.org.nz ISSN 0110-5191 (Print) ISSN 1176-9831 (Online) The whole of the literary matter of Public Sector is copyright. Please contact the editor if you are interested in reproducing any Public Sector content. editor John O’Leary: johntoleary@paradise.net.nz contributors Dave Armstrong John Ballingall Robert Brodnax Derek Gill John Larkindale Margaret McLachlan Rose Northcott Kathy Ombler John O’Leary Bill Rosenberg journal Advisory Group Annie De’ath John Larkindale Karl Lofgren Len Cook Lewis Rowland Margaret McLachlan Ross Tanner

September 2015

President’s message by John Larkindale..................................................................2 IPANZ news: Free and Frank policy advice seminar.................................................3 Editorial ........................................................................................................................4 Cover story Doing it better: Enhancing productivity and value in the public sector.............5–8 Creating a collaborative culture.................................................................................9 2015 Deloitte Fujitsu Public Sector Excellence Awards Excellence in Action: PM’s Award for Public Sector Excellence..................... 10–11 Other winners of Deloitte Fujitsu Public Sector Excellence Awards.............. 12–15 Q&A: The Productivity Conundrum: A conversation with Murray Sherwin....16–17 Better for Business............................................................................................ 18–19 Investing for the Future..................................................................................... 20–21 Some idle thoughts on productivity................................................................. 22–23 Point of view: by John Ballingall, Deputy Chief Executive of NZIER......................24

Q&A: The Productivity Conundrum: A conversation with Murray Sherwin

Better for Business

Advertising Phone: +64 4 463 6940 Fax: +64 4 463 6939 Email: comms@ipanz.org.nz Scope IPANZ is committed to promoting informed debate on issues already significant in the way New Zealanders govern themselves, or which are emerging as issues calling for decisions on what sorts of laws and management New Zealanders are prepared to accept. Information for authors Public Sector considers contributions for each issue. Please contact the journal’s editor for more information. Subscriptions IPANZ welcomes both corporate and individual membership and journal subscriptions. Please email admin@ipanz. org.nz, phone +64 4 463 6940 or visit www.ipanz.org.nz to register online.

Some idle thoughts on productivity

Disclaimer Opinions expressed in Public Sector are those of various authors and do not necessarily represent those of the editor, the journal advisory group or IPANZ. Every effort is made to provide accurate and factual content. The publishers and editorial staff, however, cannot accept responsibility for any inadvertent errors or omissions that may occur.

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September 2015 Public Sector 1

PRESIDENT’S MESSAGE

Public sector efficiency – not an oxymoron By IPANZ President John Larkindale

partnership

workplace vision

Innovation

profit

Public sector

service

solutions

understand connect

partner focus

cost

plans

2 Public Sector September 2015

development

data

concepts

Efficiency

Communication work private

investment

policy investment

outcomes knowledge

analysis people

performance

Productivity solutions

process finance

goals

Value objectives management

teamwork

Growth

risk ideas

measurement advice

change

may find real value in their doctor spending that extra time with them during each visit, but what about two others whom the doctor could not see in as timely a way? Would it have been better for a nurse practitioner or a practice nurse to have spent the additional time with the patient? How would the outcomes have been different, and which approach would result in the best value being given to the community as a whole? And how should value be ascribed to knowledge and experience? In particular, what is lost if senior professional staff have to spend undue time on routine administrative and managerial tasks as a consequence of support positions having been eliminated in order to reduce departmental head-counts? The conclusion I have come to is that once the workplace is no longer one in which widgets are being turned out in a predictable assembly line process, the measurement of productivity becomes increasingly one in which a good dollop of subjectivity is unavoidable. The corollary is that the measurement must be done by those who have a sound understanding of the business being assessed. Not knowing the business makes it very hard to ask the right questions about performance, the management of risks arising from work not done in particular. I hope that the material we cover in this issue of Public Sector will help clarify some of these issues that continue to occupy my thinking. We need to get it right, as New Zealand does not have the luxury to be able to do other than use the resources available as best we can.

advisor to the British government on this particular issue) resources that might otherwise have been devoted to increasing the UK’s defence readiness could have been applied to other purposes, including to investment in parts of the country’s economy that had the potential to increase the well-being of the population. Was he more productive if he wrote only one report a year on the subject and spent the rest of his time on other issues? Or, was it necessary to write more frequently and in more detail so that he would be taken seriously and thus influence policy? Similarly, in today’s context, is the social worker who manages a case load of, say, 30 clients of whom 90 percent are still on the books 12 months later more or less productive than a colleague who manages a case load of only 15, but of that number only five still require intensive support after a year? Or what about the doctor who spends an additional 10–15 minutes with all her patients and often picks up early signs of potential health issues, but sees fewer patients each day? To my mind, therefore, in addition to measuring productivity there is also a need to focus on value. This is not just the traditional measure of quantitative value added, but also a professional assessment of what was the outcome achieved. This is probably even more important today when, very often, outcomes are the result of contributions from a number of individuals or institutions and it becomes quite difficult to identify which interventions were the most critical. But what is “value”? Not everyone or every institution will see the same value in any transaction or activity. A patient

benefit

uch of this issue of Public Sector is devoted to the subject of productivity and value in the public sector. This is an issue that affects us all; as taxpayers, we have a right to expect that those who deliver governance to us and provide the services that we all want as a community should do so as efficiently and effectively as possible. We all know that there is always more that could be done if resources were available, so it is a core responsibility of the public sector to ensure that the human and financial resources that are available are used as wisely as possible. Over the years, I have spent quite a bit of time trying to find ways of truly measuring productivity and efficiency in the public sector context. The challenge is that often approaches used to measure performance in the public sector are proxies that don’t necessarily provide an accurate insight into the core issue that needs to be measured. It is particularly difficult to measure productivity where a desired public policy outcome is the prevention of some occurrence. In this context, I’m reminded of the story of an eminent British diplomat who retired after World War II following a distinguished career spent largely on European issues. When asked how he might describe his achievements over the previous decades he thought for a moment and said, “I spent most of the last 40 years advising governments and officials in Westminster that war was not going to break out in Europe; I was wrong only twice.” How productive was that diplomat? If his advice was taken seriously (and of course he was far from being the only

enhance

ipanz news

Free and Frank policy advice seminar

Above: Michael Cullen, Andrew Kibblewhite and Karen Poutasi speaking at the Free and Frank policy advice seminar, Wellington.

ir Michael Cullen, former Deputy Prime Minister, says public servants should keep up with technological changes and future thinking and advise ministers who don’t have time to raise their heads above the day-to-day business of government. He was speaking to the 130 people who attended the IPANZ Free and Frank Policy advice seminar at the Beehive on 12 August. “Free and frank advice is part of a democracy and both a right and duty of the public service, to be done with common sense and respect,” Sir Michael said. He added that clear-skies thinking was necessary, even if the conclusions contradicted priorities of the government of the day. For example, Treasury’s longterm fiscal outlook considered key issues, including the aging of the population and the rise in health care costs. “This can lead to discomfort of government but someone needs to give free and frank advice to consider the future.” Andrew Kibblewhite, Chief Executive of the Department of Prime Minister and Cabinet, agreed. “As public servants we have an obligation to think about the long-term as well as the present, potentially undertaking research and analysis on issues that are not priorities today but which could bite us in the future if we don’t start thinking about them now.” In his presentation, Kibblewhite said that trust between ministers and advisers created the space for free and frank advice. He said there was a wealth of guidance that helped officials to operate in the spirit of openness but which also left space for robust debate. “I don’t see an obvious erosion of free and frank advice or buy into the view that there was once a golden age. But I do see good and bad practice and I do think we collectively need to do better.” He said it was important for policy advisers to be given the opportunity to learn, debate examples and see great practice modelled. For example, it was useful for subject matter experts to be included in meetings with ministers. Dr Chris Eichbaum, Reader in Government at Victoria University of Wellington, gave an overview of free and frank advice and where it fits into

...a simple equation to represent free and frank advice as a public service capability: capacity + opportunity = capability. New Zealand’s system of governance. He provided a simple equation to represent free and frank advice as a public service capability: capacity + opportunity = capability. He called for the Office of the AuditorGeneral to hold an enquiry into the current state of affairs as regards free and frank advice. Karen Poutasi, Chief Executive of the New Zealand Qualifications Authority, said that officials had to fit the style of free and frank advice to suit particular needs, and where the context was uncertain there was rarely one right solution. “Issues can easily tip over from simple to chaotic if the ground shifts.” However, she said the New Zealand public service had adapted well to new issues, for example, the introduction of the MMP voting system, and to many demands of the modern world. “We need to demonstrate a broad range of skills – emotional intelligence, cultural intelligence, more co-creation, working with others – in order to provide free and frank advice in what is more often than not complex, chaotic environments.” And in a salient reminder that policy papers (or extracts) are subject to ever greater scrutiny, blogger David Farrar said that your advice can end up on social media and spread virally. Cabinet papers and backgrounders are often published on websites and many Official Information Act replies, rather than just going to the requester, are published by media. “Failure to give free and frank advice is more likely to get noticed and commented on. There’s no more ‘Yes Minister’,” he said. The rise of social media has meant there are many more experts out there, with unprecedented scrutiny of data. Academics and experts are now part of the fourth estate and communities of interest around bloggers can help verify stories. The Free and Frank Policy Advice seminar was well received by the participants, and IPANZ is considering holding a similar event next year. For a discussion of the current state of affairs in relation to giving free and frank advice, see the cover story in the April issue of Public Sector. September 2015 Public Sector 3

editoria l

e’ve long been aware of the “productivity paradox” – of the fact that New Zealand, despite its generally good policy settings, corruption-free government, hard-working populace and considerable natural advantages, is less productive (and so less wealthy) than it should be. While some attention has been paid to what’s holding back the country’s businesses, less analysis has been done on what’s dragging down the public sector. Since the public sector contributes at least 20 percent of the nation’s GDP, this is a matter of some importance. Accordingly, we thought it would be a good idea to devote the September issue of Public Sector to examining the question. The results have been thought-provoking. As our IPANZ President John Larkindale points out in his message, measuring public sector productivity is not an easy task; if it’s going to be done, it has to be done by those with a good understanding of the business they are measuring. One organisation that specialises in understanding productivity questions is the Productivity Commission, which has done significant recent work in the area of regulatory institutions and practices and the provision of social services. In this issue, the head of the Commission, Murray Sherwin, gives his view of the subject in our popular Q & A slot, while fellow Commissioner Graham Scott reflects on aspects of the productivity question, as these relate to healthcare, in

4 Public Sector September 2015

the main cover story. As comment from a range of interviewees in this article shows, the reasons behind poor productivity in the public sector are complex and multifarious. Nor is it just a matter of staff working harder, or better; managers, too, need to up their game. A stand-out example of the public sector improving productivity – or perhaps we should say, as Al Morrison of the State Services Commission suggests, improving effectiveness – is provided by the Canterbury Clinical Network, an initiative of the Canterbury District Health Board which won the 2015 Deloitte Fujitsu Public Sector Prime Minister’s Excellence Award for its pioneering alliance approach to healthcare in Canterbury (see page 10 for our full report on the 2015 Awards). As the Canterbury Clinical Network story shows, better collaboration within agencies and between them, and between agencies and NGOs and other frontline providers, is undoubtedly one key to improving public sector effectiveness – but how should such collaboration be initiated and managed? With care and forethought says Robert Brodnax of the NZTA, whose valuable article on the subject of inter-agency collaboration can be found in this issue. Valuable as high-level analysis is, when it comes to raising the nation’s productivity it helps to help business in a practical, hands-on way. This is the motivation behind the ‘Better for Business’ R9 Accelerator project which is designed to make it easier for business customers to deal with

government. As Margaret McLachlan’s feature piece shows, the project has been a success, and may well represent a future blueprint for government. Improving workplace effectiveness is only one aspect of improving public sector productivity; also important is how, and where, and when, the government allocates its public spending so as to achieve the best outcomes possible. The question of the ‘investment approach’ (with the political aspects it inevitably entails) is argued concisely in this issue by two expert commentators on the subject, Bill Rosenberg of the CTU and Derek Gill of the NZIER. Later, in the Point of View piece that ends this issue of Public Sector, Gill’s colleague at NZIER, John Ballingall, presents his own, personal view of the subject of policy productivity in the public sector. Sometimes, when it comes to doing more and doing better, the way forward is not always obvious; often, indeed, it is quite counter-intuitive. Such is the theme of columnist and playwright Dave Armstrong, whose sideways look at the question can be found on page 22. Instead of devoting hours to creating multi-coloured spreadsheets, he suggests, it is sometimes more valuable to buy a good coffee, sit back and have a think. Working smarter, not harder, is the way to go – something I believe we can all agree on. John O’Leary Editor

Doing it better

Enhancing productivity and value in the public sector

Productivity growth is important; it’s the means by which our society progresses. Without it, our economy stagnates and living standards decline; we get progressively poorer and the opportunities and services available for us and our children diminish. Editor JOHN O’LEARY looks into the issue.

roductivity growth is especially important in the private sector, which creates the bulk of New Zealand’s wealth, but it’s also important in the public sector, which by some estimates makes up around 20 percent of the country’s GDP. But what exactly is productivity when it comes to the public sector? How can it be measured and analysed? And if it’s growing only slowly, or even declining, how can it be enhanced? In truth, we don’t know that much about productivity in the public sector, partly because it’s inherently difficult to measure. In the private sector productivity can often

be assessed, for example by counting the number of products a factory produces in an hour (if the figure goes up, productivity has increased). But how does one measure the productivity of, say, social workers? They may see more clients in a day than before, but if the quality of their interaction with clients is poor, and the resultant outcomes not good, then can they be said to be more productive? Some attempt has been made to measure public sector productivity. Work by Statistics New Zealand, for example, shows that in the health area, inputs have been growing, but productivity has been growing more slowly; in education,

meanwhile, labour inputs have also been growing, but productivity has actually been declining. Information such as this suggests that productivity is weak in the public sector when compared to other measured sectors such as services, agriculture and manufacturing.1

Gaps

What is the reason behind low productivity in the public sector? The main thing to understand is that there isn’t just one reason; rather, a number of different factors are at play. According to the Productivity Commission, the body set up in 2011 to address the issue of New Zealand’s relatively low productivity levels, these factors include gaps in communication between employees and management and between/among agencies, tolerance of poor working practices, excessive aversion to risk, lack > of development of workforce capability, September 2015 Public Sector 5

confusion over key regulatory issues, and poor evaluative practices – to name just a few. A seminar earlier this year on creating high-performing public sector organisations led by Victoria University of Wellington’s Centre for Labour, Employment and Work (CLEW) identified other problems, such as poor leadership, weak people management and flawed information flows. And a 2013 CLEW report on workplace dynamics commissioned by the PSA found a number of areas of concern among public sector staff in relation to how they were being managed, such as poor upward communication and inadequate appraisal and reward processes. Most striking, perhaps, was the finding that many staff did not think their managers were creating the right social climate for good performance at work and that public sector agencies were too often not living up to their potential (more on this later).2 While it is important to keep these findings in perspective – none of the factors mentioned above are peculiar to New Zealand, or much worse here than elsewhere – they do suggest that there is room for improvement when it comes to productivity in the public sector.

Distracting

So how do we enhance productivity in the public sector? The Productivity Commission has a number of suggestions which include building upon the PIF process, dealing better with poor performance, delegating better, collaborating better, and embedding a good leadership culture (the right leaders in organisations). Constant restructuring is not the answer; in the words of Murray Sherwin, head of the Productivity Commission, “it’s difficult, it’s distracting, it takes your eye off the job and it’s not going to get you there”. The seminar run by CLEW Alison McDonald, came up with its own solutions, which included improving Deputy Commissioner, collaboration and developing a culture of trust between State Services agencies, developing leadership capability, involving Commission: staff more in decision-making processes, and increasing “It’s about focusing on the things that stakeholder support for public sector organisations. matter to the public So far so good. But what is actually being done, right and doing what here, right now, to enhance productivity in the public works, rather than sector? What is being done to make our public service just concentrating better, more efficient? narrowly on meeting A good example is the work done by three agencies organisational at Auckland airport (NZ Customs, Civil Aviation Authority accountabilities.” and Auckland Airport) which won them the 2015 Deloitte Fujitsu Public Sector Excellence in Achieving Collective Impact award. The Combined Departures Process (CDP) project saw the three organisations collaborating Al Morrison, Deputy closely to streamline the processing Commissioner, of passengers leaving the airport State Services while still ensuring safety and security. Commission: Fundamentally, the CDP project “People talk about involved looking at the processing productivity as experience from the customers’ being the issue, but in fact when point of view, rather than just the it comes to the organisations’, and re-shaping the public sector what departure process procedures actually matters is accordingly. The results have been effectiveness.” impressive: a smooth movement of passengers toward the departure gate and easier compliance with 6 Public Sector September 2015

Doing it better: Enhancing productivity and value in the public sector

restrictions concerning liquids, aerosols and gels [for more about this project, see our story on the 2015 Awards on page 13]. The CDP was designed through initiatives of the State Services Commission and its mandate to implement a continuous improvement culture within public sector agencies. “It’s an excellent example of public sector bodies looking beyond their organisational boundaries, seeing the ‘big picture’ and co-operating closely to produce a better outcome for the public,” says Alison McDonald, Deputy Commissioner, Performance Improvement Programmes Group at the State Services Commission. “It’s about focusing on the things that matter to the public and doing what works, rather than just concentrating narrowly on meeting organisational accountabilities. Accountabilities are important, of course – but they’re not the whole picture, and public servants need to look beyond them and consider how they can serve the public more effectively.”

Effectiveness

This theme of serving the public more effectively is echoed by McDonald’s colleague at SSC, Al Morrison, Deputy Commissioner, State Sector Reform. “People talk about productivity as being the issue, but in fact when it comes to the public sector what actually matters is effectiveness. An agency can be ‘productive’, it can even be ‘efficient’, but if it’s not being effective in what it does then it’s failing to fulfil its purpose. “We’re not going to solve the long-term social, environmental and economic problems that we face if our agencies aren’t working effectively together in the agency work they are accountable for and the system work they are responsible for. Working effectively, indeed, will tend to lead to gains in efficiency and productivity.” The problem, says Morrison, is that too often frameworks have been set up that make it difficult for people to perform effectively. “We need to change our mindset and start thinking much more flexibly and dynamically about how we provide services to the public. This means, for example, stretching how we use our PIF

framework: asking how we can make it more impactful, for example, and how we can use it across agency boundaries. “It means embedding the continuous improvement process even more deeply and making it consistent across the entire system so that people understand that if they’re not continuously improving how they are doing things then they’re standing still, or even going backwards. And it means making better, more intelligent use of the data we have so we can improve outcomes for our customers.” It’s early days yet, says Morrison. “We’ve made some really significant change but it’s still largely at the margins. We need to embed transformational change till it becomes business as usual. And already we’re looking ahead, beyond the Better Public Services programme that was set in motion in 2012. What comes next? Where does the public service want to be in 2025 and what are the barriers to getting there?”

‘Commissioning’

Morrison’s observation that the public service needs to start thinking more flexibly and dynamically about how it provides services is impressively illustrated by the winner of the 2015 Deloitte Fujitsu Prime Minister’s Award for Public Sector Excellence, the Canterbury Clinical Network (CCN). The network, an initiative set up in 2007 by the Canterbury District Health Board, developed a community-focused, citizen-centric health system where everyone involved in a person’s health pathway works in collaboration, enabling more people to access care in the community, closer to their homes. The result has been shorter waits for care, higher rates of elective services and reduced pressure on hospitals, with acute medical admission rates some 30 percent lower than the national average, age adjusted [for more about this project, see our story on page 10 ]. “The work of the CCN is a prime example of the ‘commissioning’ approach,” says Graham Scott, a Commissioner at the Productivity Commission and an expert on, among other things, the healthcare sector. “The term ‘commissioning’ is not much used here in

New Zealand, but basically it means taking a much more holistic approach to providing services in areas such as health, where we have had problems with improving outcomes. It means moving away from the traditional model of formulating policy and then proceeding to implementation towards a model that engages much more effectively with patients, communities and frontline providers. “It means moving away from a directive, hierarchical mode of working towards an approach that’s less silo’d and more flexible and common-sensical. “One small example from the health care area might be sending round homecare nurses to make sure that elderly people’s homes don’t have furniture and carpets that can trip them up, resulting in things like hip fractures, which can mean long hospital stays. It’s a simple thing to do, but the pay-off in terms of fewer hospital admissions and better health outcomes is significant.” It sounds so obvious. Why don’t we see more of it? Often it’s a question of leadership, says Scott. Another problem he identifies, echoing Al Morrison above, is that existing systems are not well set up to encourage innovation and lateral thinking. “We need to strengthen the horizontal ‘glue’, so to speak, so we can draw on the resources and expertise of bundles of organisations working in parallel. “In terms of NGOs, for example, we need to move away from short-term, over-specified contracts which suppress the creative energy that lies in many of these organisations. Frontline services can sometimes need a bit of discretion, a bit of latitude, to solve a problem, and we should allow for this. “In the end, as they say, it’s about doing what works.” The Productivity Commission is examining related issues in its current inquiry into making social services more effective, including how agencies identify the needs of people who use the services, how they choose organisations to provide the services, and how the contracts between agencies and organisations work. The inquiry report was delivered to ministers at the end of August and is expected to be published in September.

Graham Scott, Commissioner, Productivity Commission: “It means moving away from a directive, hierarchical mode of working towards an approach that’s less silo’d and more flexible and common-sensical.”

Engagement

Enhancing public service effectiveness is also an area of interest for the Public Service Association (PSA). “We tend not to talk about enhancing productivity as in many areas of the public service productivity is already high,” says Erin Polaczuk, one of the PSA’s National Secretaries. “We prefer to talk about ‘high engagement’, which has been shown to be a factor in workplace performance. And there is an issue here, because in many respects there is still a command-and-control approach taken by managers in the public service. This tends to inhibit discussion/feedback from staff and their union and limits the possibility of improvement.” Studies by overseas survey/research groups such as Eurofound, points out Polaczuk, have shown that organisations exhibiting a systematic and involving or interactive and involving approach do significantly better in terms of performance and workplace well-being than those which maintain a more traditional, passive management or top-down, internally oriented style.3 “This suggests that engaging positively and seriously >

Erin Polaczuk, National Secretary, PSA: “The problem is that the gains made have too rarely been carried through and repeated on a larger scale across the whole system.”

September 2015 Public Sector 7

Doing it better: Enhancing productivity and value in the public sector

Neglected

Polaczuk’s point about problems in implementing large-scale change across the system is endorsed by Dr Geoff Plimmer, senior lecturer at Victoria University of Wellington’s School of Management, who helped put together the CLEW report for the PSA and who took part in the seminar earlier this year on creating high-performing public sector organisations. “I’d say that there’s a problem with implementation 8 Public Sector September 2015

across the whole of the public service. While policy skills have been refined over the last 20 or 30 years, operational management skills have been neglected, with negative results. We need to pay more attention to operational management skills if we’re going to see progress towards a more flexible, adaptable public service.” Another problem, thinks Plimmer, is that managers in the public service are themselves generally poorly managed. “Currently, the professional training and development of managers is not especially good. Too many have a narrow view of what their job is – a policy manager, for example, may see his or her job as consisting in processing papers and getting sign-offs rather than managing a team so as to build capability.” Other problems include bullying behaviour by managers, say Plimmer, and tolerance of poor behaviour. Both tend to inhibit the setting up of useful feedback mechanisms. “We need to raise the benchmark in terms of managerial performance. And I am not just talking about middle management here; the people at the top also need to improve their performance. One idea is to integrate top teams more so they work together on issues, rather than having senior executives of silos meet occasionally to resolve disputes.” So, when it comes to enhancing productivity and value in the public sector, the picture is a mixed one. New Zealand is fortunate in having an honest, dedicated public sector workforce, but there are issues around effectiveness and implementation, not to mention staff engagement and managerial development. As always, there’s work to be done. References

1 See Sherwin, M. Presentation to PSA Seminar 18 April 2013. Victoria University of Wellington. 2 See Plimmer, G., Wilson, J., Bryson, J., Blumenfeld, S., Donnelly, N., & Ryan, B. (2013). Workplace Dynamics in New Zealand Public Services. Wellington: Industrial Relations Centre, Victoria University of Wellington. 56-60. 3 See Kankaras, M. and van Houten, G. (2013). European Company Survey 2013. Dublin: Eurofound. 122-28.

Geoff Plimmer, Senior Lecturer, School of Management, Victoria University of Wellington: “We need to raise the benchmark in terms of managerial performance. And I am not just talking about middle management here; the people at the top also need to improve their performance.”

with staff and their unions – listening to their concerns, taking on board their suggestions, and acting on them – has major benefits in terms of workplace effectiveness. This is the thinking that lies behind the Sustainable Work Systems (SWS) programme that we introduced in 2009. There are some examples of where this approach has worked very well, for instance at the Bay of Plenty District Health Board where a pilot training project involving clerical schedulers at Tauranga and Whakatane hospitals was highly successful in reducing the number of Do Not Attends (people who don’t show up for appointments) and in developing a flexible, patient-centred appointment booking service.” “The problem is that the gains made have too rarely been carried through and repeated on a larger scale across the whole system. One reason behind this may be that managers fear that by engaging with staff and their union more fully, they are going to lose control, or that if an initiative doesn’t work they will be blamed.” While risk always needs to be taken into account, excessive risk aversion by managers can be a problem, inhibiting innovation and improvement, says Polaczuk, echoing a finding by the Productivity Commission. “Managers, in my opinion, need to change their mindset just as much as staff. They need to listen and learn, and trust the people they manage, and their unions. You could say that we’re talking about a more modern, democratic relationship between managers and staff, from which both will benefit.” Polaczuk questions, too, the assumption in government thinking that contracting out public services to NGOs and private sector service providers is going to lead to improved effectiveness in service delivery. “I don’t see much evidence of this, and I am concerned about the negative impact such a model has on public service morale. I mean, if public services are going to be farmed out anyway, why bother to improve your own working practices? “In the PSA’s opinion we should be focusing on improving the workplace culture of our existing public service agencies. The 2013 CLEW report which we commissioned showed that many PSA members, while committed to their work, did not feel their managers were creating the right social context for high performance in their organisations, with decisions being made based on politics rather than facts and analysis, for example, and not enough time spent on developing the capability of subordinates. “Nearly 40 percent of members surveyed did not think the organisation they were working in was achieving its full potential. That’s a rather high figure and suggests there’s plenty of work to do to create high-performing public service agencies.”

Creating a collaborative culture A key factor in enhancing productivity in the public sector is collaboration, both inside and between/among organisations. But successful collaborations don’t just happen; they require careful planning and management. Here, Robert Brodnax, Regional Manager, Planning and Investment at the NZTA, explains what needs to happen if collaboration is to succeed.

e all understand that cross-sector collaboration is a key mechanism by which the public sector is expected to achieve the Better Public Services outcomes. It is easy to articulate this expectation but experience shows that delivery of collaborative processes is not a simple task. In 2013, I was granted a Leadership Development Centre fellowship to investigate the key elements of successful collaborations. Interviews were conducted with over 100 leaders of collaborations in New Zealand, the United Kingdom and the United States to distill the key factors that underpin successful collaboration. Subsequently these learnings have been tested both in practice and via seminars and coaching sessions with teams in a number of public sector organisations. The interviewees consistently identified four key factors: clarity of purpose; planning and preparation; creating a collaborative culture; and the capability of the people involved.

Clarity of purpose

For collaborative projects to be successful, all partners need to understand why they are collaborating and be committed to achieving a shared goal. In the most successful collaborations the commitment has to be deeper than just the shared goal – the leaders of the organisation were committed to the collaboration, the incentives to work collaboratively were strong, and there was an equally strong commitment to helping each of the partners or individuals involved achieve their individual goals. One reason cross-organisation collaborations fail is that one partner is not prepared to put the effort in to help make the other partners successful or is not prepared to share risks as well as benefits.

Planning and preparation

Successful collaborations do not spring perfectly formed from a meeting of senior leadership teams. They are developed over time and based on careful up-front planning and preparation and constant effort on the part of the teams involved.

The more time spent up-front determining the project measures, common reporting frameworks, team membership and governance structures, the more likely the collaboration will be successful. A key factor in successful planning and preparation is the explicit agreement about how risks and benefits will be shared. Some collaborations take this philosophy even further, including in the planning phase a plan for how the collaboration will end and making explicit how factors such as intellectual property will be managed after the project is completed.

Creating the collaborative culture

Robert Brodnax, Regional Manager, Planning and Investment, NZTA: “Delivery of collaborative processes is not a simple task.”

The intent to collaborate in itself is not enough to guarantee success. It is easy to appear collaborative at the beginning of the project when the excitement and shared sense of purpose is strongest – but if the team working on the project does not develop a shared culture then conflict is inevitable as the cultures of the different partner organisations come to the fore when the pressure is applied at the end of the project. In Alliance contracts (which can involve four or five partners), the normal practice is to engage an Alliance Coach whose task is to bring the disparate cultures of the partner organisations together and create from them a unique culture for the individual alliance. This coach works with the Alliance team throughout the life of the contract: checking in on the health of the culture, helping the project managers foster the culture, and supporting the staff when conflict between organisations arise. Many of the interviewees identified the failure to create a collaborative culture or to provide appropriate incentives for people to work collaboratively was a key cause for the failure of collaborative projects.

Collaborative capability

Not all people are suitable for working in cross-organisation or cross-sector collaborative projects. In many organisations the apparent “stars” are not the ones that will be most effective in an environment where the ability to foster and grow relationships, share risk and walk in other people’s shoes are key success factors. Organisations that have a successful track record in collaborative working identify and develop their “collaborative stars” deliberately to work in collaborations whilst retaining their other “stars” for projects where collaboration is not required or appropriate. These factors are not simple to address – they require leadership commitment, time and sheer hard work. That is why collaborative, cross-agency work is not the answer for all problems. But for those most complex problems, owned by multiple agencies or organisations, collaborative working practices such as those described above are critical. September 2015 Public Sector 9

Excellence in Action Innovation, engagement and leadership quality were all celebrated in July at the 2015 Deloitte Fujitsu Public Sector Excellence Awards. Take a closer look at this showcase of public sector accomplishment, some of it lauded on the international stage, and a common theme emerges: collaboration. KATHY OMBLER explains.

e have departments sharing information and developing common programmes, health boards partnering with the private sector and collaborating with its patients; agencies working with iwi, and law enforcement agencies working not only as a team in New Zealand but also with international organisations to thwart crime. From the health board that asked its patients what mattered most – and discovered it was all about the very first welcome, to the Police, Customs and Internal Affairs team that worked together to apprehend child abuse offenders and rescue several young victims, to the multiagency co-operation that built a web tool to help young people make informed study choices, to the departmental and iwi collaboration that’s attacked the cycle of unemployment in Northland – a definite pattern emerges of the power of working together. There are more examples in the following profiles, all positive stories that show many agencies in the public sector are working together for the betterment of New Zealanders.

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Prime Minister’s Award for Public Sector Excellence Canterbury Clinical Network, Canterbury District Health Board

The development towards a communityfocused, citizen-centric health system where everyone involved in a person’s health pathway works in collaboration, under an alliance framework, has won Canterbury District Health Board (CDHB) the Prime Minister’s Award for Public Sector Excellence for 2015. Since its inception in 2007, the Canterbury Clinical Network (CCN) has pioneered the alliancing approach in a health setting, enabling more people to access care in the community, closer to their homes. The result has been shorter waits for care, higher rates of elective services and reduced pressure on hospitals. Older people are staying in their own homes for longer and a range of conditions that were once treated purely and mainly in hospital are now provided in general practice. Last year alone, more than 30,000 people who would previously had been admitted to hospital with acute medical conditions received treatment in a community setting, including in their own homes. This has slashed acute medical admission rates to 30 percent lower than the national average (age adjusted). If the rest of New Zealand admitted people to hospital at the same rate as Canterbury, it has been estimated there would be 120,000 fewer people in New Zealand hospitals. British medical and social care think tank the King’s Fund praised the Canterbury health system for its collaboration and integration and rated it among the world’s top healthcare systems. System is the key word, says David Meates, CDHB Chief Executive. “One of the first things to stress is that we are a district health board not a hospital board, and one of our core functions is the planning and funding of all health services for the population of the Canterbury region. This includes community pharmacies, general practice teams, NGOs, home-based support services and aged care services, as well as hospital services. So a core element of this is looking at how to get all the different parts of the system working together with a common vision, with the patient at the centre of every single thing we do.” The establishment of the CCN has been the response to a looming crisis in the region’s health system. In 2007, Canterbury

faced growing hospital admissions and waiting times and an ageing population. Without change, by 2020 Canterbury would have needed another large hospital, 20 percent more GPs and 2000 more aged residential care beds. “We needed to connect our health systems in a way that worked for providers and, more importantly, for Cantabrians,” says Meates. “The CCN has become the driver of our integration journey; the vehicle to drive the integration agenda and interface between the primary and secondary parts of our health system.” The network is not an entity, he adds, but rather a range of clinical leaders from across the health system (described as the Alliance Leadership Team) chaired by Sir John Hansen, with planning and funding functions embedded. Since 2009, the CCN has developed new service delivery models, funding and contracting mechanisms based on principles of high trust, low bureaucracy and openness and transparency between Alliance Partners and members, says Sir John Hansen. “As a result, Canterbury people are increasingly taking greater responsibility for their own health and accessing care in the community closer to their homes. The evolution of our approach and advances made to provide integrated care closer to home have resulted in alliancing being adopted nationally,” he adds. Meates says the CCN is redesigning the way health services are delivered. “Healthcare providers operate collaboratively through a number of clinically-led work streams and service level alliances to ensure the right care is delivered in the right place at the right time and by the right person. These alliances are accountable for exploring, identifying and recommending new service delivery approaches to the CCN’s Alliance Leadership Team. They have a clear scope, mandate and membership with a range of competencies and perspectives from across the system.”

Collaboration fundamental

Collaboration has been fundamental, says Meates. “We work in a high-trust environment. All parties are at the table and we are designing and shaping what we are going to do together. This is very important, with 122 general practices, 111 pharmacies, 70 NGOs, 5000 aged resident care beds and the hospitals and health centres, and we’ve got all of these thinking and operating on one system.

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Sir John Hansen, Alliance Leadership Team: ...the CCN has developed new service delivery models, funding and contracting mechanisms based on principles of high trust, low bureaucracy and openness and transparency between Alliance Partners and members.

2015 Prime Minister’s Award Winner – The Canterbury Clinical Network, Canterbury District Health Board.

“Building trust in the alliance way of working and confidence that if it is the right thing to do then the funding will follow has been fundamental to success,” he says. A stand-out example of the network’s achievements has been the Canterbury community-based falls prevention programme. This is specifically designed to reduce falls in the community, hospitalisation as a result of falls, and to help people maintain their independence. Since 2012, 3500 elderly people have been through the falls programme, reducing ambulance presentations for falls by (an estimated) 1000 people, says Meates. “Calculated by the number of people we would normally expect to be presenting with hip fractures, 370 hip fractures have been avoided. This equates to 30 fewer hospital beds occupied on any given date. Most important, this equates to a whole number of people not going

through the misery of breaking their hip.” Meates also credits the network for enabling the Canterbury health system to cope following the Canterbury earthquakes. “We had been on our integration journey for a number of years; it began before the earthquakes, not in response to them. It is because we were already working in such an integrated way that the system didn’t implode, when otherwise it surely would have. It enabled the system to respond in a number of ways you wouldn’t normally associate with a health system.” The King’s Fund report hailed Canterbury’s health system as a rare example internationally of a system that has made the transformation towards integrated care with a measurable degree of success. “What the Canterbury experience demonstrates is that it is possible to provide better care for patients, reduce

demand on the hospital and flatten or reduce elements of the demand curve across health and social care by improved integration – particularly around the interface between the hospital, primary care and community services,” the report stated. “A small number of leaders were at the heart of Canterbury’s transformation, however this leadership rapidly became collective, shared and distributed,” it added. However, the King’s Fund report also noted that creating a new system takes time, and that Canterbury’s journey is far from complete. Meates knows the journey towards becoming a fully integrated system is still evolving. He says transparency and partnerships are key to achieving this. “A key learning (to date) has been the importance of investing in building trust > and confidence and the development of September 2015 Public Sector 11

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strong partnerships between clinical and non-clinical staff. CCN learnt early on that engagement and transparency were key to success. Without the partnership with all parts of the Canterbury health system, including health managers, challenging for change would not have been as successful.” He says a second, albeit obvious learning has been the importance of having a really clear, combined and over-arching vision. “For us, the home, family and the individual is at the centre of everything we do.” IPANZ president John Larkindale said the Canterbury Clinical Network is a great example of collaboration and integration of services. “The network has transformed the way health services operate in Canterbury, with astonishing results.” For Meates, the most significant outcome is that Canterbury people are taking a greater responsibility for their own health. “A citizencentric health system is absolutely core to where we are and where we are going to continue to go, making it totally seamless for the family and individual.” The Canterbury Clinical Network also won the Excellence Award for Improving Public Value through Business Transformation.

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Other winners of Deloitte Fujitsu Public Sector Excellence Awards Excellence in Integrity and Trust Measuring Performance – linking patient/customer experience to organisational values Waitemata District Health Board Giving life to patient feedback has been at the core of developing new organisational values for the Waitemata District Health Board (WDHB). In looking for a new way to measure performance and monitor improvements, a suite of reports were developed that mapped narrative feedback from patients and visitors to the DHB’s organisational values and behavioural standards. “For the past two years we’ve taken a customer-led approach to our organisational development; what is it our patients and families want and how do we deliver that,” says Sarah McLeod, Workforce Development Manager. “This has helped us use the patient’s voice in a way the staff can understand. It gives life to the feedback from the patients; it’s their feelings being expressed, not just quantitative data.” “It means we can move away from using electronic surveys for the wards, which currently miss some areas and teams such as orderlies, who can make a significant impact on a patient’s experience,” adds Jarrard O’Brien, Patient Experience Manager. “We now have a set of 16 behavioural standards that have been developed by us and the community. This gives us solid ground that what the public is telling us is important; for example, how the initial contact is critical. We have learned that being welcoming and friendly right at the start is the single most positive thing we can do for a patient experience. That really resonates with our staff.”

Excellence in Crown–Māori Relationships Project Haere Ministry of Social Development Haere, meaning journey, is an apt name for this project that has succeeded in moving unemployed people from Northland to help address workforce shortages in Canterbury. It began when Northland’s Te Aupouri Māori Trust Board approached the Ministry of Social Development seeking to break the cycle of unemployment in Northland. It asked the Ministry to address the region’s limited employment opportunities, along with social barriers to employment such as poor education, limited work experience, and drug and alcohol use. As a result, Project Haere was developed to link with job opportunities in Christchurch. Participants completed an intensive marae-based training programme in Northland and then, working through Ngāi Tahu and employers, were deployed to Canterbury and employed on Allied Workforce Contracts. Accommodation, meals and transport to work were provided, as well as further training opportunities and pastoral care. More than 80 percent who started with Project Haere are still employed, and remain off the benefit. Eru Lyndon, Regional Commissioner for Social Welfare Development Northland, says ‘haere’ represents not only the physical journey of project participants but also the personal journey that each individual, whānau and community is taking. “It is also important to note that the journey is not a one-way outcome; it is the programme’s intent that participants return home with skills and experience that will enable their continued independence and contribution to the Northland economy.” Lyndon said a major project highlight was seeing people improve their career prospects by taking on study and working part time to financially support themselves. “Other highlights include helping people to overcome drug addictions, alcohol dependency and long-term unemployment.”

New Zealand as a whole. This information didn’t exist before and this project has created a path. Other government departments are now expressing interest.”

Excellence in Digital Impact Deciding with Data – Compare Study Options Ministry of Education, Statistics New Zealand Which tertiary course should a student choose? A web tool that outlines the benefits of specific study options, along with a clearer, overall view of the value of our tertiary education system, are the happy outcomes of a prolonged informationsharing programme between several government agencies. When the Ministry of Education saw the need for a tool that would allow young people to compare careers and make informed study choices, it called on data collected with the help of Statistics New Zealand, with input also from Inland Revenue, the Ministry of Business, Innovation and Employment, Careers New Zealand and the Tertiary Education Commission, to build a picture of where former students went after their study, and which qualifications provided certain benefits. Through the resulting web tool, Compare Study Options, students can now find out median salaries, employment rates and a range of other information about courses they are considering. In its first week the tool had a staggering 41,000 views. Roger Smyth, Ministry of Education Group Manager Tertiary Education, said developing the tool was complicated and involved pioneering work. Considerable care had been taken to set up procedures to satisfy privacy legislation, for example. “The resulting tool enables students to carry out quite specific comparisons between qualifications. The overall benefits of understanding the employment outcomes of tertiary education are also of value for tertiary providers, and to

Excellence in Improving Performance through Leadership Excellence (joint winner) The ‘8’ Programmes – Xcelr8/ Collabor8/Particip8 Canterbury District Health Board People generally go into health to make a difference. Reconnecting people to those reasons, empowering them and enabling them to transform systems have been the principles behind Canterbury District Health Board’s successful ‘8’ programmes, says Chief Executive, David Meates. Dealing with a growing and ageing population, increasing demand and funding challenges meant something had to change in the Canterbury health system. Hence the development of the three workshop programmes. Xcelr8 is about leadership and management development. Collabor8 introduces staff across the health system to lean thinking and other leadership principles. Particip8 gives participants the tools to enable change. Participants are taken out to explore different industries, for example hotels and Air New Zealand, says Meates. “The reason is to introduce different ways of thinking, outside the health context, and not be constrained by the thinking that says ‘but we’ve always done it this way’.” At the end of the programme participants pitch their improvement ideas to Meates and the executive team. Upon successful completion of the Xcelr8 programme, participants receive a ‘permission to change the health system card’ and successful projects are aligned with executive sponsors and appropriate resources to proceed. Since 2007, nearly 2000 staff have taken part and more than 1000 stories of change have been brought to life. These have driven improvements and savings at clinics and departments throughout the system; for example, slashed waiting times, improved communication between duty nurses, reduced reporting wait times for X-ray and scan results, and realised total savings of nearly three million dollars across all projects. Many initiatives, and the

‘8’ programmes themselves, are being used in other regions. The non-financial benefits include staff being valued. Having the CEO’s permission to change the system, it seems, is a powerful tool.

Excellence in Improving Performance through Leadership Excellence (joint winner) DIA Talent Development: developing leaders for success Department of Internal Affairs A leadership development framework and culture programme that moved the organisation from an all-time low engagement level to one that now sits above the state sector benchmark has been achieved in just three years, at the Department of Internal Affairs (DIA). In 2012, after taking on several new functions including all-of-government ICT, the department was fragmented, lacked clear purpose and needed a ‘step change’ in performance. The new Leadership Development programme, including a Talent Development approach, was created for leaders and managers. Specific offerings included manager induction, a 10-month core leadership development programme, a senior leadership programme and participation in cross-sector opportunities. Engagement surveys since 2012 have shown a positive and observable shift in leadership and culture, with a 117 percent increase in the number of engaged staff. The DIA has also supported the development of the State Sector Talent Toolkit. Seeing their leaders develop and DIA becoming a great place to work has been incredibly satisfying for Anna Finlayson, DIA Manager HR Development. “We’re a small HR team which worked really closely with the Executive Leadership Team to develop and embed a fantastic leadership programme in a relatively short time. “What was really helpful was the collaboration with our executive team. Our Chief Executive was quite clear about what he wanted from DIA leaders and the key part they play in embedding culture change across the organisation. We were given license to be creative and innovative. They really supported us.”

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Excellence in Achieving Collective Impact Doing better, together, for our customers and our people at Auckland Airport New Zealand Customs Service, Civil Aviation Authority Protecting our borders and at the same time caring for our travellers: cross-agency collaboration has been the essence of this programme aimed at streamlining security clearance processes and improving the traveller experience at Auckland Airport. The ‘Combined Departures Process’ (CDP) has seen the Civil Aviation Authority, NZ Customs and Auckland International Airport Ltd work together to improve each department’s understanding of the whole departures process. The shared approach has delivered a smoother flow for customers, a better SmartGate experience and easier compliance with restrictions on liquids, aerosols and gels. Most satisfying for Peter Lewis, Manager Passenger Operations at Auckland Airport for the New Zealand Customs Service, has been the change in behaviours of staff. “They are now developing stronger relationships with airport agencies and understanding

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customer needs. There is no longer a view that the organisations develop a system based on what is best for them. Now it’s about what is best for the customer and how that fits into the organisations’ requirements. He says the programme has been exciting on many levels. “This includes developing stronger relationships with government and private sector agencies and being part of an innovative and unique design in passenger processing.” The CDP was designed through initiatives of the State Services Commission and its mandate to implement a continuous improvement culture within government sector agencies, he adds. “Once the CDP has been implemented it will be a world-first, single-step customs and security screening departure process.”

Excellence in Public Sector Engagement Heading to Hospital – Plan your Trip! Canterbury District Health Board A lot of sick, frail people come to hospital; many arrive in emergency situations, and even able-bodied visitors need to know where to go to deliver their passengers

and park their car. So when three months’ notice was given that the entire Christchurch Hospital car park was to be closed to allow for the construction of a new acute services building, alternative parking had to be found. Not only that, the public had to know where to go. Canterbury District Health Board’s response “Heading to Hospital – Plan your Trip!” found substitute parking space close to the hospital, set up a free ‘Park and Ride’ scheme, re-organised hospital traffic flows, engaged volunteers to help at dropoff zones and launched a massive, multichannelled publicity campaign so that everyone knew about it. “It was really critical for people to know,” says strategic communications manager, Karalyn van Deursen. “We trialled options with our oncology patients; some very ill people. Then we launched our public information campaign. We emailed groups and clubs, went on social media, we had bus stop posters, fliers, and we engaged at staff meetings so staff could spread the word. We also communicated with other hospitals because we take a lot of referrals from throughout the South Island.” Up to 900 people now use the shuttle services each day, with 49,000 journeys made on the shuttles in the first 14 weeks of operation.

Excellence in Regulatory Systems Operation HYPER: An Innovative Multi-Agency Approach to Child Exploitation Investigations Department of Internal Affairs, New Zealand Police, New Zealand Customs Service A collaborative response across three agencies, tackling the international distribution of child abuse material and actual child sexual abuse, netted much more than an IPANZ Award for the Operation HYPER team. In one heady day of action, following a systematic step up that included carefully co-ordinated, covert online interaction across three countries, seven offenders were apprehended and have subsequently been convicted. As well, seven young victims were rescued and placed into safe situations. The agencies involved – New Zealand Police, Customs, and DIA – had identified clear overlaps where they could work together to get the best possible outcome, says Jon Peacock, DIA Team Leader Censorship Compliance Unit, Wellington. “It’s something we have been aware of for many years: that there are three agencies in New Zealand with a degree of legislative commonalities, us from the publications point of view, police from publications and physical abuse points of view, and New Zealand Customs in protecting our borders from this kind of material. “While we have always had a good working relationship, this operation formalised the collaborative arm to undertake online investigations.” Such operations can be very challenging and very difficult to manage in order to get a successful outcome, he adds. “Succeeding not only in identifying offenders but also in identifying and rescuing the kids has been incredibly rewarding for everyone involved.” Peacock says New Zealand is now developing an international reputation for co-ordinating joint agency operations. “Looking ahead, it’s about recognising the value of working together and exploring ways to improve our collaboration even further, to continue to achieve successful outcomes on a global basis.”

Young Professional of the Year Rachel Tremewan (nee Bowley) Waikato Institute of Technology Going on a journey with and shifting the perspectives of school principals have been stand-out highlights for Young Professional of the Year, Rachel Tremewan – along with the telephone calls from grateful parents. Working in her role as Wintec’s Waikato Trades Academy Manager, Tremewan has helped to more than double the numbers of Waikato secondary school students completing trade courses. “Essentially it’s been a journey we’ve gone on together, with the principals changing curriculums, structures and in some cases their entire timetables to enable the students to take on trade classes.” By developing flexible funding plans, new vocational pathway programmes, and partnerships with secondary school principals, Tremewan has brought more than 26 schools across Waikato and Thames on board with what has become the largest Trades Academy in New Zealand. Student numbers attending Academy courses have increased from an inaugural 48 in 2013 to 580 in 2015. In the process, Tremewan has become recognised by the Ministry of Education, secondary school principals and her peers as an expert on secondary/tertiary partnerships. “What it really means to me is all the little stories, realising that you have made an impact on so many students. The girls’

engineering class, for example, with 14 students enrolled in 2015 and a plan for a girls’ construction class as well next year. We weren’t seeing girls coming through before. “Getting phone calls from the parents; one from the parents of a boy who was told by his teachers he couldn’t learn. He was in his second-to-last year in school and had no qualifications and, by the end of his year at the Trades Academy, he had achieved NCEA Qualifications level 2 and a top student award. “It’s a major system change, not just little band aids. We really needed to do something,” she adds.

Rachel Tremewan (right) accepting her award from Gillian Peacock, General Manager State Sector, Local Government & Corporate at The Skills Organisation.

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Q & A

The Productivity Conundrum A conversation with Murray Sherwin

Productivity Commission Chair Murray Sherwin deals in big, meaty issues. Like why, despite appearing to have the right infrastructure in place, does New Zealand continue to drift down the OECD standard of living rankings, and how do we improve public sector productivity given its significant contribution to the country’s economic well-being? He talks with Public Sector writer Rose Northcott about the productivity conundrum. How do we measure NZ’s public sector productivity?

It’s a real challenge, in terms of methodology. We are putting a lot of effort into this along with our colleagues at Statistics New Zealand, trying to get a handle on what’s going on in terms of trend movements and productivity in the public sector. We have some analytical work underway and hopefully will have material rolling out from the latter part of this year into next year.

Why is it important?

The public sector, excluding benefits and straight transfers, accounts for something approaching 20 percent of GDP. Because it is so large, and its influence is so broad, it is critical that the public sector perform well and absorb the least resources necessary to do the best job.

What has to change to improve public sector productivity?

There are two elements. One is how the public sector itself goes about doing its own work – how it picks up new technology, how it amends its processes to make use of available capacity of new technology, finds better ways of interacting with the public and delivering outcomes.

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At least as important is the impact public sector decision-making has on the private sector. We did a major piece of work last year on regulatory institutions and systems and how well those regulatory regimes work. That has an enormous impact on the economy and private sector productivity.

What can be done now to improve public sector productivity?

Most of our reports have a public sector element to them. Themes that come up repeatedly are skills and training, ensuring people are properly skilled for the role they have. There are also cultural themes – the culture of an organisation, the leadership and engagement processes within agencies all matter to performance. The key thing is ensuring people are clear about what they are doing, why and how. The quality of policy advice also matters enormously. The notion of free and frank advice has been under pressure in a number of places and it’s important we don’t take our eye off that ball. We don’t actually measure the effectiveness of a lot of what we do in the public sector. We therefore don’t learn as much as we should about what works

and what doesn’t and so we don’t run the continual feedback loops necessary if we are to learn from our experience.

Is there a need for structural change to improve public sector productivity?

I always shudder when I hear references to structural change. We seem to leap to structural changes too quickly and pay too little attention to cultural changes and the evolution process that most agencies need to go through to improve. We face continual tensions around empowering rapid and decisive decisionmaking and action, versus more consolidation or collaborative actions. It’s always a trade-off and there’s not likely to be any grand solution out there. Cultural and capacity issues are really important. We need to be thoughtful and deliberate in understanding how complex systems interact and what part is shaped by architecture and what part by culture and behaviours.

Is intolerance of failure stifling public sector innovation?

Yes. You see a good deal of discussion of this in our draft social services report. A low tolerance for risk translates into highly prescriptive top-down directives. You see it in contracts with the social sector for NGOs. They are very prescriptive about what they must do and how they should do things. The outcome of that is to remove a lot of the capacity for decision-making at the front line close to the people in need. There is pressure on the people in the system to be compliant rather than respond to the needs they are trying to service. Inevitably, politicians are highly averse to having a microphone stuck under their nose and being expected to be knowledgeable in detail about specific instances. It’s time to push some of that further away from politicians. It is not at all helpful to society in the long term to drive that degree of risk aversion into the system from the top.

Is New Zealand moving back up the OECD standard of living ladder?

The fact remains that over the last 40 to 50 years we’ve dropped well off the curve

from where we were. Climbing back up the international rankings is not straightforward. But it matters, because our productivity performance determines our living standards and the quality of choices that we have available to us, both individually and collectively. We are in the process of working out a meta story or narrative in which we lay out our understanding of this whole period of relative decline and what policies and strategies will best assist us to regain lost ground. Why do we struggle to match productivity gains we’ve seen in the rest of the world? Why, in particular, do we struggle with that challenge when many of the basic bits of infrastructure for a high performance, high productivity society appear to be there? By the usual indicators, our public sector is pretty damn good – it’s free of corruption by and large, well led and highly competent. We have a regulatory system which, while we can always find things to improve, is good by international standards. We have good governance structures and transparency. All of that should contribute to higher performance economically. We’ve got all the basic infrastructure pieces in place. Identifying what’s missing is the conundrum that economists have been wrestling with for years. My own presumption is that distance matters, as does size – to a degree. But we’ve always been where we are geographically and have been a small economy, so something else has changed. The research we are doing points to a lack of connection with international value chains. Countries performing well are closer to international value chains. They draw inputs from other countries and add value to those. We have tended to be at the end of the value chain and less engaged in high frequency transactions, adding value at different stages of the value chain. There is also an issue characterised as

“We did a major piece of work last year on regulatory institutions and systems and how well those regulatory regimes work. That has an enormous impact on the economy and private sector productivity.” knowledge-based capital: to what extent we are making investments in high knowledge fields building intellectual property and innovation. We are off that curve.

What qualified you for this job?

My career started at the Reserve Bank where I was working in public policy and economics. I did stints at the OECD and the World Bank on secondment from the Reserve Bank. I think New Zealanders need to spend time working offshore to get some perspective on life in New Zealand. Both my offshore jobs provided me with a lot of learnings and networks. I was then part of the Muldoon advisory group in the early 80s, a particularly interesting time, and left that in time to return to the Reserve Bank and work through the 1984 foreign exchange crisis. That interesting juxtaposition of roles has given me broad experience. Nine years as MAF CEO gave me exposure to a broad raft of issues from biosecurity to trade policy. That was the apprenticeship, if you like.

How’s your job satisfaction?

This is really interesting work with the satisfaction of starting an organisation from scratch – building it from nothing over four years and working with a really great group of people. We are given big, meaty mandates to work on and our work is being taken seriously. I couldn’t ask for more than that.

Being a Productivity Commissioner is a part-time role; what else do you do? I chair a body called the Innovation Partnership, a group of individuals from the public and private sector, including Google, Chorus, InternetNZ and MBIE, who have a shared interest in driving greater innovation through the internet and associated

technologies. I also chair a Strategic Risk and Resilience Panel made up of individuals from government and the private sector pulled together by Andrew Kibblewhite (Department of Prime Minister and Cabinet Chief Executive). We’re tasked with advising the government about big picture risks that Cabinet or the prime minister might be worried about, assessing how well we are dealing with those risks, how New Zealand could build resilience and response capability, and where the priorities should sit. We look at everything from natural hazards to cybercrime to financial risk to wider socio-economic risks, plague and pestilence.

Is the Productivity Commission making a difference?

I think so. We’re finding strong interest in our work. Ministers and officials are taking our work seriously and we’ve had strong commitments from the government to implement our recommendations. In many respects, the extent and quality of the conversations we are having with ordinary New Zealanders about productivity-related issues is just as important. But an awkward issue for us is turning that positive response into harder, quantitative measures of performance. That is always going to be a challenge, as our longer-established counterparts in Australia will attest. So that is a work in progress for us. Ultimately it’s the business community, workers and ordinary New Zealanders who need to find our work useful to them. We work hard to communicate and engage with the public and are trying to make our work very relevant to New Zealanders. It’s about working smarter and lifting living standards and well-being.

September 2015 Public Sector 17

Better for Business Making interactions with government easier and cheaper is one way to enhance the nation’s productivity. New Zealand’s first accelerator process for government projects has been successfully trialled by the Result 9 – Better for Business partnership and could prove to be a new approach for government. MARGARET MCLACHLAN explains what’s been happening.

Andrew Bardsley, General Manager, Better for Business: “Accelerator is a glimpse of what the public sector might be – innovative, customer-focused, involved in co-design and co-production, and energetic.”

etter for Business is a partnership of eight government agencies, led by the Ministry of Business, Innovation and Employment, working to make it easier for business customers to deal with government. General Manager Andrew Bardsley says, “Better for Business is working to reduce costs and improve services and the Result 9 (R9) Accelerator was one way to make a difference, quickly.” A series of five problems, or ‘pain points’ in the way customers interacted with government were chosen for a pilot. Project teams had 12 weeks (April–June) to turn the problems into solutions; create a Minimal Viable Product; test these with customers; and pitch the solutions as fundable projects on Demo Day. One of the participants, Graeme Simpson of Statistics New Zealand, says, “The 12 weeks were intense; they flew by. It was a structured, well thought-out process. The first month was spent talking to the customers, finding out what was causing them pain and testing possible solutions. The second month was involved in iterative design and development of our Minimal Viable Product (MVP) and the last month was preparing for Demo Day. The best part was getting out and talking to customers, hearing it directly from them.”

Minister Steven Joyce with Glenn Thurston and Samson Phommachack of Vizbot at the R9 Accelerator. 18 Public Sector September 2015

He added, “I come to work to make a difference, and I felt like that was happening every day. We were creating something of value.”

Excitement

Bardsley agrees that the energy and excitement generated by the project teams was something he’d like to see more of across the public sector. “The teams were housed together, generating a high level of creativity and excitement. They were listening to customers, making connections with technology and being creative in finding better solutions.” Of the five projects three have reached due diligence stage, with organisations interested in taking them further. The project teams consisted of three to four members, including one private sector entrepreneur. They were drawn from government agencies likely to be involved in delivering the solutions – including people from Statistics NZ, the Ministry for Primary Industries, Education New Zealand and the Ministry of Business, Innovation and Employment. Simpson says his team consisted of himself and two other Statistics NZ people (a user interface designer and a digital product manager) and a private sector entrepreneur. “Driven by the needs of the customers we were talking to, and by our desire to truly remove the pain points they were experiencing, we continually narrowed our focus until we arrived at the Shoppin concept. Shoppin is a tool to help retail and hospitality businesses decide if a location will be suitable to set up shop. “Information to help make this decision existed but was spread across government departments and used overly complex language. Shoppin brings data together in one place to make it easy for people to use,” Simpson says. Shoppin combines commercial property information with freely available government held and private sector data about the people and areas that those properties are in. Shoppin is currently undertaking due diligence with Statistics New Zealand who have indicated strong interest in it. The other two MVPs from the R9 Accelerator that are proceeding are: • Vizbot, a web application that will make the building consents process more efficient. It works with existing council systems and processes to give agents, such as builders and architects, and building owners more visibility of the status of their building consent application. Several councils, including Taupo District and Queenstown Lakes District councils, have expressed interest in it. • Nexus Marketplace is an online service that will help businesses find government APIs (application program interfaces), which connect computer

systems to allow them to share data. It will help government make decisions about developing new APIs. This service is of interest to several government agencies. Not all the project teams got their focus right the first time. The EasyComply team started off looking at a solution for making it easier for horticulture and viticulture businesses to find seasonal workers, but they found that those industries are influenced by social and economic factors that their digital solution could not address. Halfway through the 12-week process, the team refocused its efforts on improving the employees’ application process for essential skills visas by simplifying language and providing in-context help. The lessons from this project are with Immigration New Zealand.

Learning

Simpson likes the lean, start-up methodology applied by the R9 Accelerator Project. “It’s all about getting something out there and learning from customer interaction with the product. This is how government should be working. Sure there’s an element of risk and you have to be prepared to fail. But you can fail fast and fail cheap, not take two years only to find you haven’t met the industry need.” Bardsley says the Government Procurement Unit at the Ministry of Business, Innovation and Employment is

The Shoppin project team at the R9 Accelerator Demo Day (Graeme Simpson far right). interested in using this methodology as part of the wider government’s tool kit. “It’s true we have a limited resource and need to look at equipping ourselves in a different way to generate better outcomes. Use of the accelerator process and private sector involvement in solutions are one way to do that.” An R9 Accelerator Two is in the pipeline for early next year. Improvements from the first trial include: • A different process to select the project teams, possibly initiated from a start-up weekend later this year for public servants and the private sector interested in particular problems. • A greater level of agency support

and sponsorship of the projects from inception. • Potential for some projects to be realised and funded by the private sector. “I think there is a community of people across the public sector who are well suited to this way of working. Accelerator is a glimpse of what the public sector might be – innovative, customer-focused, involved in co-design and co-production, and energetic. We need to get more of that excitement across the public sector,” Bardsley says. Find out more about the Result 9 Accelerator and the Accelerator teams’ products and experience at: www.mbie. govt.nz/what-we-do/better-for-business

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September 2015 Public Sector 19

Investing for An important aspect of improving the effectiveness of the public sector in New Zealand relates to the question of allocation: how, where and when the government directs its spending in areas such as social services. Here, two sides of the debate on the ‘investment approach’ are presented, the first by Bill Rosenberg of the New Zealand Council of Trade Unions, the second by Derek Gill of the New Zealand Institute of Economic Research.

n ‘investment approach’ to the provision of public services is attractive if it means taking a long-term view of the costs and benefits of provision of services and spending more now to reduce future costs while maintaining or improving effective services and benefits. However, this requires balanced consideration of costs and benefits in the widest sense or it becomes simply a cost reduction exercise. In contrast, the “Investment Approach” used in the Ministry of Social Development (MSD), which is being considered for wider use, considers only costs. In the MSD sense, the term appears to cover at least two aspects, both using its historical database: calculation of a ‘future fiscal liability’ to evaluate “success”; and design and prioritisation of interventions.

Future fiscal liability

The future fiscal liability (briefly, ‘fiscal liability’) of current welfare beneficiaries is estimated from two decades of social security records. This uses statistical modelling to project each beneficiary’s future use of welfare benefits and their cost. Assume for now that this is accurate. The liability is solely fiscal: that is, the call on current and future government revenue. Its reduction is then used as an objective for policy purposes and in prioritising interventions such as stricter employment requirements for single parents. The fundamental flaw is that this procedure looks only at costs to the government. A proper cost-benefit test weighs benefit against cost. The ‘approach’ does not measure benefit. We are asked to accept that reducing fiscal liability is strongly correlated with better social outcomes because it aims to get people into work. But being employed is not always the best outcome for beneficiaries: consider their children’s needs for example. Nor is employment necessarily better than a welfare benefit: insecure, low-income work with poor career prospects may have worse outcomes according to Michael Marmot and other researchers. Further, fiscal liability is an unreliable measure of employment outcomes. MSD

20 Public Sector September 2015

data for 2014 suggests between often confuses correlation with 29 percent and 44 percent of causation, based on partial benefit cancellations did not information. Correlation is a lead straight to work or study treacherous policy guide. (it doesn’t know for sure). Many relevant factors are Some of these people may be omitted from modelling such in acceptable circumstances as economic conditions (other and some (including those in than unemployment); families’ prison, who died or who social full financial situations; agencies say are homeless) household health, housing Bill Rosenberg, certainly are not, but fiscal and skills; and longer-term New Zealand liability ignores this failing. outcomes including quality of Council of Trade Many go into poor quality work. Too much weight seems Unions. work. High churn rates are one attributed to the available data indicator. Statistics NZ’s Linked because it is available. Employer-Employee Data finds only 32 Modelling errors, including missing percent were in work and off welfare factors, are highly material. MSD claims benefit for all their first six months in that welfare reforms resulted in fiscal 2013. Up to 46 percent returned to a liability falling $2.2 billion in 2013/14. welfare benefit within a year in 2013/14 Yet this is only 3 percent of the total (depending on cohort) according to MSD, estimated liability and because it is what perhaps because of insecure work or the modelling can’t account for (a residual) 90-day trials as their 2013 Benefit System it is very sensitive to modelling errors. report suggested. Robust information can assist in But exit rate is a poor measure of focusing case management. Tightly quality. Increased time on benefit can targeted and directive interventions, improve employment quality according however, can have severe consequences to researchers David Card and others. for beneficiaries or create poverty traps. Additional funding of job search or Again, cost-benefit assessment cannot be retraining may be more than justified limited to fiscal costs. socially and economically by the benefits The same is true regarding choice of to beneficiaries, employers and society of interventions, but this has become deeply the resulting higher quality work. Because politicised. In a non-sequitur, choice of both increase fiscal liability, the ‘approach’ interventions has become political spin for judges them failures. contracting out services, at a time when The government is considering using it is evident how debilitating competitive the Investment Approach in other public contracting arrangements are for many services. Consider education. Its future non-profit organisations and their fiscal liability will be increased by those employees. advancing to higher education. Sound early childhood education is likely to lead to later educational success. Should we therefore intervene at early childhood to reduce the likelihood of future success? Of course not: there are many non-fiscal benefits of more education. The simplistic fiscal liability approach fails there; why is it considered valid for social welfare?

Use of data

Using a rich dataset to explore associations between policies, clients and outcomes can be very worthwhile. However, it does not need fiscal liability to be useful and relies on sound modelling. MSD’s use

Conclusion

Future fiscal liability is just a more sophisticated fiscal cost measure. Basing policy on such a one-dimensional measure is perilous and ultimately simply cost reduction. The use of ‘big data’ certainly can have benefits but methodology, particularly for policy purposes, must be robustly above reproach. The political baggage attached to the Investment Approach will damage any positive aspects. As it stands, it promotes an impoverished approach to public policy which can be dangerously wrong.

the future

ew Zealand introduced outputoutcome budgeting over 25 years ago but we have failed to make any sustained progress on outcome-based management. The ‘Investment Approach’ is a useful new tool to help decision makers target public spending to achieve better outcomes – and compare different policy interventions in terms of the return on investment (ROI). The Investment Approach allows agencies to use data to prioritise their clients for particular interventions on the basis of the expected impact and consequent reduction in future liability. It provides a feedback loop to decision makers about the quality of their decisions in achieving outcomes. It was first used by ACC and has now been picked up by the Ministry of Social Development and applied to welfare, and the early results are encouraging. The scope to use the Investment Approach in other areas is now being explored as it can be applied to any problem where there is a large, risky investment spread over time. The Investment Approach allows for a much needed shift from a short-term focus on transactional output efficiency in managing public spending to a longerterm focus on outcomes. Given the size of the public liability, the potential gains from adopting a longer-term view are considerable. Adopting the Investment Approach will help officials understand the drivers of long-term cost, how it might be reduced, and a feedback loop shows how they are performing. The Investment Approach is sometimes criticised as a tool to reduce spending. But taking a long-term approach need not reduce total spending – indeed, it may result in spending more up front on those at risk of long-term welfare dependence. But it’s not just about managing spending. The real potential lies in the difference that this approach makes possible for the people at greatest risk of long-term welfare dependence, helping them move from welfare into work. Longterm welfare dependency is bad for people’s life chances. Getting someone off the benefit and into a job doesn’t just provide income, but restores social inclusion, and leads to better health

outcomes and well-being. The fiscal return on investment may be readily calculated using this approach, but this is just a proxy for the intangible benefits of living in a community where more people are happy and fulfilled.

Big data

If we combine the Investment Approach with big data we can discover which services work for whom, rather than providing the similar services to everyone, and provide targeted interventions. The Ministry of Social Development (MSD) is now using data analytics to understand the characteristics of the clients helped by Work Search Support, in order to target the service at the people most likely to benefit. Using the Investment Approach, it is possible to measure the marginal added value. In this case, the return is the reduction in benefit liability. Once the cost of each service is added, the ROI can be calculated. The results in some cases are dramatic. Consider the comparison of General Case Management with Work Focused Case Management (a more intensive one-to-one approach) and Work Search Support (WSS) (a one-to-many service). James Mansell in his paper to the NZ Productivity Commission noted, “Refining the targeting to focus on people for whom WSS is most effective provides a potential of more than $4.00 ROI within 20 weeks”. Is future welfare liability a good proxy for the things society cares about or are we measuring the wrong thing? The aim is to get the unemployed and other employment-ready people into work. This matters, not just because it reduces the cost for everyone else, but also because employment improves social inclusion and life chances – for the individual and their family. Is it a better proxy than the one it has replaced? In the example above, it is clearly much better than a simple transactional efficiency measure and the threshold targets introduced as part of Better Public Services. Placement back to work has been replaced by a long-term measure of outcomes, future liability, which leads to better targeting of welfare spending.

Derek Gill, New Zealand Institute of Economic Research. Cost Benefit Analysis is the gold standard for assessing the value of policy interventions but it’s hard to use CBA as a management tool. The virtue of the Investment Approach is that it permits management tools, such as costeffectiveness analysis, to be embedded in the policy cycle as an appraisal tool as well as a monitoring and evaluation tool. Whereas a CBA is undertaken as a one-off study, the Investment Approach can become part of the way an agency does business. Service centres can get comparative data which allows benchmarking of offices, improving service delivery, and helps policy makers understand the drivers of the trends they observe.

Insight

The client insight afforded by data analytics also enables an agency to become more customer-focused, to understand their clients better, and learn all the time about what works for different customer segments. Not only does it improve allocative efficiency, but at the site level it is a useful tool to help managers manage. However, like any tool the Investment Approach has limitations. It can only tell you who to interact with, not what to do or how to do it. It can’t provide insight into the receptivity to change of the target group. And there are obvious limits to its generalisability. There are still ‘false alarms’ and ‘failed alarms’ at the individual level. Furthermore, because it is a proxy, it requires good governance. Despite all of these limits, we suggest that as a tool it has brought a longerterm focus on outcomes which has been sadly lacking in the New Zealand public management system.

September 2015 Public Sector 21

Some idle thoughts on productivity Increasing workplace productivity isn’t always an easy matter. In this light-hearted piece, Wellington columnist and playwright Dave Armstrong takes a sideways look at the subject and comes up with some novel ideas…

productivity. “You’re right,” I replied. “There’s a lot of money at stake, we need every writer on this job.” Grammar Boy was delighted.

Really good coffee

“So go and buy really good coffee for all the writers,” I ordered. Grammar Boy was most confused. “But it’s urgent, just make them write without coffee.” I had him. “I thought you said it was important. If we want to write a really good new ending, we’ll need really good coffee.” Frustrated, Grammar Boy trooped off and came back with a whole tray of coffees. I made sure before we started that we mucked around gossiping and joking – we were comedy writers after all. Then we eventually came to the urgent matter of an ending. In the relaxed and jovially caffeinated environment, it didn’t take long for the writers to come up with a much better ending than my original. We bashed out a final draft in minutes, for which I was delighted to take some credit even though the others did the work. Grammar Boy sent the new script through, convinced that I was certifiably insane, and the producer and crew were delighted. Today, I often think of Grammar Boy when I see a politician or CEO talk about the need to improve productivity. Being a largely Protestant country, we like someone sternly telling us that we have to tighten our belts and work harder. And therein lies the mistake we make: we equate productivity with hard work. And yet if we look at countries which are more productive than we are – and there a lot of them, such as France and Italy – they tend to have shorter working weeks, longer lunch hours and consume more wine and good food. Can you imagine a politician in Spain, Italy or France becoming massively popular, as Roger Douglas did in New Zealand during the 1980s, by sternly informing that population that with “no pain” there was “no gain”? Even worse, if you look at the hours worked by different groups of New Zealanders, it’s often those on lower incomes who work the longest.

“A restructure is also a great way to get rid of productive staff.”

t was many years ago and I was a senior writer for a television company making a comedy show. Sounds fun? At times it was one of the most depressing jobs you could imagine. The producer would read through hundreds of short, supposedly funny sketches the writing team had produced and write down on each, without cracking a smile, “no, no, no, maybe with a rewrite, no, no, no.” Very occasionally one of our small team might get a ‘yes’ for a sketch and keep their job for another week. It was into this depressing arrangement that Grammar Boy arrived. He was not a writer but would be in charge of production matters. He was a product of one of the country’s prestigious high-decile boys’ schools, hence his nickname. Grammar Boy had a good academic record, had been a champion sportsman and unlike the smoking, drinking, caffeine-addicted, time-wasting reprobates who made up most of the comedy writing team, felt he knew all about productivity. One day Grammar Boy got a call from our producer at the studio. A sketch that I had written was currently being filmed. Though it had been labelled ‘yes’ by the producer, it had an ending that the entire 20-odd crew, and now the producer, had agreed was decidedly unfunny. We needed a new ending as soon as possible. Grammar Boy sprinted up the stairs in that way ambitious new employees do to tell me the news. “There are nearly 30 crew members on full pay sitting around waiting for a funny new ending and they need it fast,” he gasped. I sensed that Grammar Boy, a big fan of old-fashioned values, wanted me to wield a big stick in front of the other writers. Perhaps lock them in a room and don’t let them leave until we had our ending? I decided it was time that Grammar Boy learned a lesson about

22 Public Sector September 2015

Anyone who has worked in a traditional office environment will recognise the hardworking unproductive person. They will be there first thing in the morning creating spreadsheets which detail all the work that all the other people in the office haven’t yet done. Documents with beautifully contrasting colours for each category are almost a surefire sign that the author is truly unproductive. These hard-working types will have highly detailed graphs and tables of what and how some plan is going to happen. They will write massive reports with executive summaries long enough to be reports themselves. Their project management timelines stream out from ‘last week’ until ‘due date’ like a beautiful Escher tessellation. The only thing wrong is that the ideas and processes that they are advocating are usually entirely unworkable. While they have done many hours of ‘work’ they haven’t actually sat down and thought really hard about the problem they are trying to solve. They may be hard-working and a wizard on Excel, and they may well be promoted because they don’t loudly spend work time on Facebook like the brilliant but unpopular young maths graduate who’s just started, but they are still unproductive. In world terms, they are less productive than the Italian shoemaker who has a two-hour lunch break followed by a siesta and the crazy French account executive currently involved in three office affairs. So how do we actually improve productivity? Some talk about our disadvantageous geographic location, our relatively unskilled workforce, or old machinery and our lack of specialisation. I’m not really skilled or specialised enough to comment. Others say our businesses are too small to have productive economies of scale, but then I’m reminded of the incredible artisans in Europe who often run highly efficient family-based businesses. Would Moët et Chandon really be more productive if it was the size of Fonterra?

Sitting round doing nothing

I suspect thinking plays a big part in productivity. Trouble is, sitting around doing nothing but thinking might have been fashionable in Ancient Greece, but is decidedly out of fashion in present-day New Zealand when the cry from business types is ‘dooeys not huis’. If you don’t believe me, next time you start a really big task – writing a report or implementing a new staff strategy – try spending ten minutes thinking about it. No notes on paper, no typing, no reading, no

“Being a largely Protestant

country, we like someone sternly telling us that we have to tighten our belts and work harder. And therein lies the mistake we make: we equate productivity with hard work.” Google searches: just staring into space thinking. It’s harder than you think. Put your feet up on your desk while you’re thinking and someone will no doubt walk by and pass comment about your ‘laziness’. Do too much of this dangerous thinking and someone else will probably e-book you for a meeting or workshop to soak up all that excess time you appear to have on your hands. People want action, not thoughts or words, and who cares if the actions you choose are unproductive? Work doesn’t have to be actually done; it has to be seen to be done. Perhaps instead of idealising the ‘hardworking, salt-of-the-earth’ Kiwi types, we need to punish them. Imagine a workplace where anyone who worked more than 35 hours a week was immediately fired. Anyone caught working at home in the weekend would be put on notice, and anyone who hadn’t used up their sick leave would not be allowed to return to work until it was done. Of course a crisis would ensue initially, but it might be a great way to get people working smarter, not harder. It’s obvious that despite the best efforts of our government and economists, productivity is a really difficult thing to increase. Given that I can make writing a 400-word article stretch out over a week, I feel I’ve not much to contribute on the productivity issue. Then again, my vast experience working for various state and private organisations has made me an expert on how to decrease productivity, or increase unproductivity, if you prefer. Think of a task and I guarantee I can come up with a way to do it less efficiently. At the top of my increasing unproductivity list is restructuring your workplace. Even if only 5 percent of staff will be finally affected, the process still manages to put the wind up the other 95 percent and staff morale plummets, along with productivity. This is because people aren’t stupid and they are aware that the amount of havoc caused by a restructure is inversely proportional to the amount of disruption that management tells them will occur. A restructure is also a great way to get rid of productive staff. Such workers are often very sensitive. If they sense they are in a negative

culture where they are not valued, they get the hell out. If they’re truly productive, it’s likely they’ll get snapped up somewhere else, leaving less productive staff to wonder why their department has recently become less productive. You could argue that if you’ve headed a department or organisation for some time then you actually get quite a good idea of who is truly productive and who is not. Perhaps, yet if that is so, why does most restructuring happen when the CEO or head of department is new to the job? Or worse, the restructuring is done by consultants who have absolutely no idea of the real productivity of any of the staff. And guess what happens, those hard-working people with the colour co-ordinated spreadsheets get to keep their job. What often happens after restructuring is that productivity drops so much that more staff have to be hired – often contractors. The most productive contractors tend to be people who know the business well, often because they have recently been made redundant in a restructure and end up doing much the same job they were always doing, before they got their massive redundancy payment because they first signed on as a cadet when they were 15 in 1975. They now work at a contract rate at twice or three times their former salary. That’s why in so many organisations, public and private, that I have worked in, the old saying goes “the permanent staff come and go but the temporary contractors are here forever”.

Feet up on the desk

So the way forward? I once spent a week making a short video about the sport bookies at the TAB. They were an intelligent and highly productive bunch whose entire week was spent setting odds. To do this they had to watch a lot of sport. Today, when it came to productivity, I remember the words of their sagacious boss far more than any efficiency experts or Grammar Boys. The TAB boss was fond of saying ‘If I walk in here and the bookies aren’t drinking coffee with their feet up on the desk and watching sport on TV, I want to know why’. Perhaps it’s time we all made a really good coffee, put our feet up on the desk and ‘idly’ thought about some real and meaningful ways to improve productivity that involves making life easier, not harder. September 2015 Public Sector 23

P oint of v iew

So far, this issue of Public Sector has considered workplace productivity and the question of allocative efficiency. But what about the important area of producing policy advice? How good is it, and can it be improved? John Ballingall, Deputy Chief Executive of NZIER, considers the matter.

Wherefore art thou, walk-shorts? Ongoing innovation and creativity in policy advice Bureaucracy destroys initiative. There is little that bureaucrats hate more than innovation, especially innovation that produces better results than the old routines.1

ureaucrats often get a bad rap. The perception of the wider public is of an army of po-faced Wellington policy wonks, soaking up taxpayer dollars in a never-ending effort to frustrate individuals and businesses through paperwork and risk aversion. As one cynic put it, “A bureaucrat is a person who cuts red tape sideways”.2 The reality is much different. In this post-GFC environment, where fiscal constraints bite into government departments’ budgets, more attention is being paid by senior government sector managers to boosting productivity and lifting the quality of outputs. Productivity is essentially a measure of the amount of quality-adjusted units of output produced for a given set of inputs. Therefore an important aspect of monitoring value for money is measuring the quality of the advice. Around $900 million was spent in 2009/10 on central government policy advice and related activities.3 Ministers are demanding agencies do more with less. The only systematic study of what features of policy advice are important to ministers which we have found was an Australian study which identified a number of values4. The bottom line was that transactional values (such as timeliness and factual correctness) matter hugely. If they are not achieved, this will undermine the credibility of the analysis provided. These transactional values are necessary but not sufficient 24 Public Sector September 2015

conditions for high-value-added policy advising. The top line, according to the Australian study, is transformative values (such as being creative, innovative and visionary) that are “differentiating factors that create consummate value”. Each year the New Zealand Institute of Economic Research (NZIER) reviews the policy advice of around 20 agencies in our Policy Advice Benchmarking Club, and we have assessed over 5,500 policy papers over the past decade. We assess each paper against a set of established and tested criteria. These are based on work on the characteristics of quality policy advice in the New Zealand context and our understanding of the standards expected by a minister, or other significant stakeholder. Essentially we judge whether the paper guides the user to do what needs to be done in a way that makes their life as easy as possible, given the context of the issue at stake. The nature of this guidance is shifting and becoming more complex. Ministers’ expectations around innovative design are rising rapidly. The demand for more evidence-based analysis is lifting due to the availability of ‘big data’ and stakeholder scrutiny of Better Public Service targets. The rise of social media and the 24/7 news cycle creates a different set of communication risks and opportunities. And all of this at a time when agencies are being asked to produce more with less due to ongoing fiscal pressures.

Innovative

In this context, we have seen over the years a number of encouraging and often innovative developments to indicate that policy advice is moving with

the times and delivering value for money. The average quality of policy papers has gradually improved in recent years although much remains to be done to lift standards across the board. At the heart of these positive shifts is a greater recognition by analysts and managers of the numerous pressures facing ministers. Ministers face endless piles of paper and rarely have the luxury of reflecting on and pondering the nuances of policy advice. So today’s policy paper is likely to be short, written in the active voice and organised under headings and subheadings that map out the narrative for the busy minister. The key points come first, in a journalism-style ‘reverse pyramid’ approach, with supporting material to follow. Papers are also increasingly using visual techniques to get their messages across in an easyto-absorb fashion. We are seeing more graphics, tables and charts replacing pages of dense text. A3 posters are frequently used to summarise information and set up discussions between ministers and officials, or with other ministers. One thing that hasn’t changed is the need to base advice on robust analytical frameworks that allow options to be identified and compared against assessment criteria. Advice without a framework is just expensively purchased, albeit well-informed, opinion. Successive independent reviews of agencies’ Regulatory Impact Statements have highlighted this as a common weakness across policy shops, and in our experience, high quality options analysis, and especially quantified cost-benefit analysis, remains an ongoing

challenge. In addition, increasing ministerial aversion to exposure via Official Information Act requests has meant that free and frank advice often happens faceto-face, rather than in the context of formal advice, which limits the ability of agencies to be explicit around some issues. While NZIER’s reviews focus on the quality of policy advice, this is just part of the picture. The Department of Prime Minister and Cabinet launched the ‘Policy Project’ in 2014 with the objective of improving the performance of the policy function and quality of policy advice across government. Key areas of focus include policy and system leadership, policy capability, and policy products and services. In addition, the Treasury Policy Advice Measurement project is tracking the trends in a common set of core policy indicators over time. In short, crafting high quality advice is damned hard, with ongoing pressure to improve performance from within existing baselines. But based on NZIER’s engagement with government agencies in our Policy Advice Benchmarking Club, we are quietly confident that today’s modern advisors – and some of the old guard, to be fair – are up to the task. Innovation is alive and well in the public sector. References

1 Herbert, F. (1984). Heretics of Dune. New York: Putnam. 2 Attributed to Joseph McCabe (1867-1955), an English writer and speaker on freethought. 3 Scott, G, P. Duignan, and P. Faulkner. (2010). ‘Improving the Quality and Value of Policy Advice : Findings of the Committee Appointed by the Government to Review Expenditure on Policy Advice’. Wellington, New Zealand: The Treasury. 4 Behm, A, L. Bennington and J. Cummane. (2000). ‘A Value-Creating Model for Effective Policy Services’. Journal of Management Development 19(3): 162-178.

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2015

Public Sector Conference 16 September 2015

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