Target bureaucracy, not workforce, to boost public sector productivity

The Federal Government’s commitment to slashing 12,000 staff won’t deliver on its aim of reducing costs and increasing productivity in the Australia Public Service new research shows.

Attempts to boost public sector productivity by substantial redundancies have become routine under incoming governments. The Qld government faced statewide strikes as it set to scale back the public sector by thousands (HRR519) last year and the NSW government introduced a bill creating a single senior executive structure, replacing the current chief exec service, senior exec service (SES) and a range of award-based senior exec positions (HRR538).

However, Ernst & Young Oceania advisory leader Neil Plumridge told HRR redundancies and cost cutting measures were not the answer to productivity gains. “Productivity is boosted by employee engagement,” he said, adding that fear of job loss was “not usually” an engagement measure (HRR536).

E&Y Productivity Pulse research has found the “burden” of public sector bureaucracy was slowing down innovation, negatively impacting employee engagement and costing the Australian tax payer $2.4 bn in lost productivity. However, Plumridge said reducing staff instead of “bureaucracy” would not result in improvements.

Innovation stymied by system

Plumridge said the time taken to get an idea approved in the public sector due to “too many approvals” meant “well-meaning and highly professional public servants” often had innovation stymied by the system.

He said the research showed “overly complex operating models” meant staff did what was expected of their jobs, but did not necessarily go the extra mile compared to private sector employees with similar skills and roles. “The skill level is right, but there’s no culture of higher performance,” he said.

The survey of around 2,100 public and private sector employees from seven industries found 13% of public sector employees said their primary focus was pleasing their manager, rather than improving the quality or quantity of their work.

Plumridge said the performance management systems of the public sector needed to be overhauled to redress this challenge.

He said the public sector invariably used budgetary measures as performance indicators for projects, rather than return on investment (ROI). “There is not enough work done on measuring project outcomes,” he said. He said the failure to measure ROI and outcomes led to reduced personal accountability for ROI.

The inherent challenge for HR

He said this created a problem for HR as the lack of accountability contributed to reduced engagement resulting in “high churn” of some staff.

“There is a culture of people moving around the public service, which means the person who starts a project may not be the person who finishes a project,” he said. He said the churn resulted in project delays, work being duplicated and little personal satisfaction for staff working on the project.

The results showed public and private sector managers were “ill-equipped to drive a team’s productivity”, with fewer than 25% of all employees reporting their manager encouraged them to exceed expectations. However, the results were more profound in the public sector, with a “significantly lower percentage” of public sector employees recording satisfaction with managers.

He said it was important the public sector “ensure they had the management capabilities and employment practices required to support a productive work force”.

The research showed 39% of public sector workers felt they needed more staff to deliver current workloads, in contrast with 24% of their private sector peers. (more)

Questioning the process

Plumridge (above) said public sector productivity could be dramatically improved by assessing the existing controls and approvals processes to make sure they were “fit for purpose”. “You really should step back every three years to check that they are still relevant,” he said.

He recommended benchmarking the approval layers against the best comparative function, regardless of sector. “The private sector should also benchmark against the public sector – so it’s not about ‘private is best’ it’s just about getting a much wider focus,” he said.

He said the “magic thinking” in productivity and return on investment was “thinking through the alternatives and new ways to deliver a service or product”. “Ask yourself ‘why do we do this’ and then ‘what’s the best way to deliver it’. It may be via outsourcing, it may be moved online, it may no longer be needed… all of these alternatives need to be considered,” he said.

Redundancies can exacerbate problems

Plumridge said government agencies would need to carefully manage redundancy schemes to ensure they did not lose high performing talent and worsen productivity.

“Unless managed carefully and strategically, the very process of reducing jobs will exacerbate poor public sector productivity,” he said. He said research showed if an underperforming team underwent a restructure and redundancies it would take six to nine months to become productive. While a high performing team put through a redundancy will recover in two months.

“The next big wave in productivity change in the public sector will not come through redundancies, but through improvements to the way employees are managed and motivated,” he said.

While public sector productivity is lagging behind the private sector, overall productivity has steadily increased since February 2012. On a ten point scale, productivity current sits at 7.7, however the increase has come about via individual workers, not organisational change according to the E&Y Pulse findings.

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