Performance management is a requirement of all managers and employees in the enabling workforce. Staff develop annual performance agreements in conjunction with their supervisor; clear goals are to be set and recorded, with progress discussed part way through the year and again at the end of the year, when performance is rated. That rating determines whether the employee’s salary is increased by the quantum set out in the Defence Enterprise Collective Agreement.
This concept and approach is essentially sound, and if properly executed, performance goals should align with Defence’s priorities as expressed in the Corporate Plan. However:
• A sample of performance agreements showed that performance goals are not always clear or focused on outcomes, nor aligned to outcomes and requirements cascaded down from the Secretary to every level; and • Hard conversations and decisions are not taking place. Performance assessment data shows that in 2014 less
than two per cent of staff were rated below satisfactory.
The financial impact has been quantified: over the period 2010–2014, pay increases for pro-forma performance assessments have added to each year’s wage bill and now add tens of millions of dollars of expense. The evidence shows that Defence has a sound performance management tool at its disposal, but is not using it effectively. We view this as a failing of leadership and management. Staff need to be informed of priorities, what is to be done, why it is necessary and how it contributes to the larger Defence mission. Leaders have to set the example through behaviour. Difficult conversations not held are detrimental to the performance of individuals, and to the morale of other staff who see pay increases awarded for underperformance.
Failures of leadership are confirmed by recent survey data that show Defence’s public service leadership trailing that of the Services and the broader Australian Public Service in key areas.90 There is a disparity between how Defence
senior leaders see themselves and how they are seen by their subordinates.
Defence staff reported little confidence in their senior leadership. The leadership was seen as not very effective at leading and managing change and did not appear to be held accountable for their performance.91 By contrast,
Defence senior leadership performance appraisals rated less than one per cent of senior staff as less than effective: more than half were rated ‘superior’ and one in eight were rated ‘outstanding’.92
There are clear grounds for Defence’s leadership to reform and strengthen the performance management system to: • Introduce clear, outcome-focused accountabilities, cascaded down from the Secretary’s accountabilities and the
priorities outlined in the Corporate Plan;
• Make it more transparent and apply it consistently with normal distribution techniques being incorporated; • Recognise and reward high performance and team leadership, including by 360 degree appraisal; and • Apply real consequences for poor performance generally and not dealing with underperformance.
90 Australian Public Service Commission, State of the Service Report 2013–14, 2014, available at <www.apsc.gov.au/about-the-apsc/parliamentary/state-of-the-service-2013-14>.
91 Analysis of data from Defence’s YourSay Organisational Climate surveys of 2013 and 2014. 92 Data provided by Defence People Group.
The review team notes that these reforms will support the statutory requirements of the Australian Public Service Commission that come into effect on 1 July 2015. It is imperative that the elements we have outlined are incorporated as part and parcel of the management of the Defence enabling workforce. We recommend that Defence
implement a transparent performance management system that is consistently applied, recognises and rewards high performance and introduces consequences for underperformance and failure to deal with it. An example is shown in Diagram 11 below. We have concluded that external assistance is required for a period to catalyse the process and set it on the right path.
Diagram 11: Performance Management System
The outputs of employees in this performance management system are determined by the enterprise plan, cascaded through the organisation. The intended impact of the recommendations is to drive fundamental change to Defence’s management and performance culture.
We recommend that as part of the performance management system, Defence take steps to create a culture where leadership, professionalism, and corporate behaviour are valued and rewarded.
Set business model, organisation structure and accountabilities Agree individual role accountabilities Agree individual performance goals/outcomes
Ensure individual and shared accountabilities are specific, measurable, outcome-focused, horizontally consistent, and cascaded from the Secretary to junior staff
Introduce upward appraisals for Executive Level 1 to Senior Executive Service Band 3 to feed into performance potential assessment Recognise outstanding
people managers who are also high-performers in their own right
Convene Performance Appraisal Review Panels
• Review proposed staff performance/potential ratings • Challenge and calibrate rankings to fit forced distribution • Agree individual performance implications,
especially for underperformers and talent pool Impose consequences on managers
who do not deal with underperformers • If an employee is rated Not Effective,
managers must initiate a Performance Evaluation Process • If managers do not manage an underperformer, their rating is downgraded
• Underperforming staff cannot move to another role Reward top talent
• Expand current
Talent Management Programs • Introduce talent exchanges
Track individual performance Assess individual performance Review and calibrate assessments Manage performance implications Introduce Australian Public Service Staff assessments against a performance/ potential matrix with guidelines around the distribution of results