The Governance Institute of Australia

6 May 2019

Mr David Thodey AO

Chair

The panel for the review of the Australian Public Service

Department of the Prime Minister and Cabinet

PO Box 6500

Canberra ACT 2600

Via email: apsreview@pmc.gov.au

Dear Mr Thodey

Independent review of the Australian Public Service: Interim
report

Governance Institute of Australia (Governance Institute) is the only independent professional

association with a sole focus on whole-of-organisation governance. Our education, support and

networking opportunities for directors, company secretaries, governance professionals and risk

managers are unrivalled.

Our members have primary responsibility to develop and implement governance frameworks in

public listed, unlisted and private companies, as well as not-for-profit organisations (NFPs) and

the public sector. Governance Institute is a national provider of governance training.

We welcome the opportunity to provide feedback on the Interim report of the Independent

review of the Australian Public Service (APS). We provided a submission on the independent

review on 31 July 2019.

We commend the independent panel for highlighting the importance of strengthening the

culture, governance and leadership model of the APS and support the proposed role of the

secretaries’ board in improving the quality of performance reporting across the service. We

agree with the panel on the importance of measuring outcomes and performance in boosting

accountability and trust in the service.

Importance of performance management

Internationally, and across Australia, public sector entities have not always succeeded in

adopting good overall performance measures which are linked to the key strategic outcomes

determined by the governing body or key stakeholders such as the portfolio Minister.

Recent experience in Australia (see the 2013 report of the Australian National Audit Office and

the report of the Independent review of the Australian Public Governance, Performance and

Accountability Act, September 2018) and the US (‘Managing for results – Government action

needed to improve agencies use of performance information in decision making’, United States

Government Accountability Office, September 2018) suggests that the drive by Governments to

achieve improvements in performance management by public sector enterprises has stalled.

In 2013, the Australian National Audit Office reported that:

‘Our audit reports and the Pilot show it is time for greater attention, investment and resourcing

to be given to the quality and integrity of KPIs used by public sector entities to inform decisions

about the performance of government programs.’

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We note the recent findings of the review panel, that the APS needed:

‘Transparency around performance expectations and management of secretaries, This could

include clear criteria on the basis for performance and evaluation, and measures linked to

legislated responsibilities, government and ministerial priorities, and departmental and service-
wide outcomes.’

Most public sector entities in Australia use data sets or metrics to measure the performance of

the entity and as the basis or reporting to stakeholders. The use of such metrics is often based

on the belief that counting many things will motivate improved performance. This is not always

the case. We consider that performance management using detailed data sets can often

distract boards and management from focussing on the key strategic issues confronting the

entity. Rather than gathering a myriad of metrics about (often) minor activities unrelated to the

board’s ultimate objectives, there needs to be a real focus at the board level on metrics that

matter to the prosperity and effectiveness of the enterprise. These form the Key Performance

Indicators (KPIs).

We consider that it is good governance for an organisation to have a performance management

system that contains the following elements:
• a focus on a systemic approach to measuring performance linked to objectives, goals
and strategies of the organisation
• the use of metrics within an appropriately structured framework which are based on
accurate and reliable data
• a process to measure and evaluate performance changes over time
• a plan to improve an organisation’s effectiveness and efficiency
• demonstrated links to the risk management framework and other key control systems
• provision to contain both financial and non-financial metrics, including those relating to
input costs, processes, outputs and outcomes
• reflects consultation with employees and stakeholders
• transparent and timely public reporting on the progress towards achieving results
• use of metrics that illustrate and analyse changes in performance and outline remedies
where goals are not achieved within predetermined time lines
• supports the ongoing promotion of a positive performance culture across the
organisation.

Governance Institute has recently reviewed its guidance in KPI’s to include a discussion on the

important features of an effective performance monitoring and management system and we

attach this good governance guide to this submission.

We welcome the opportunity to engage further with the review panel and elaborate on any of

these issues.

Yours sincerely

Megan Motto

CEO

Governance Institute of Australia