Organisational Health and Capability

Changes in our Organisational Strategic Direction

Over 2009/10 we have made significant changes to the way we work, the way we are organised and how we exercise leadership to better manage and accommodate the changes in our environment.

In 2009, the Treasury conducted a review of our leadership functions, positions and structure, with the aim of lifting overall organisational performance. The context that prompted the review included: (a) an external environment that had undergone radical changes – global financial crisis and a new Government with new requirements; (b) a recognition that the nature of our business functions had changed; (c) a need to keep making progress on the change objectives raised in our 2006 “Stepping Up” review; and (d) a desire to position the Treasury for the future and develop future leaders.

The main changes arising from the leadership review were:

• having a smaller, tighter ELT, with the appointment of two Deputy Chief Executives to work with the Secretary to the Treasury and to act as a Treasury Board
• mechanisms to bring together strategic thinking across the Treasury’s three outcomes so that Ministers receive advice that is joined-up, forward-looking, innovative and solutions-focused
• mechanisms to promote more flexible prioritising of the Treasury’s resources across all its outcome and result areas, so that it is agile and responsive to Ministers’ needs
• ways to make the Treasury a more integrated organisation that effectively leverages its own skills and expertise, as well as its external relationships, in order to achieve results for its customers
• a focus on behavioural change to promote accountability, consistency (“one Treasury”) and influence
• greater clarity around decision-making and advisory responsibilities
• establishment of two new positions to assist in building economics skills internally (Chief Economist); and the financial capability within the public sector (Chief Accountant)
• initiatives to incorporate more commercial expertise and disciplines into key areas of its work; for example, on State sector performance, on management of the Crown’s balance sheet, ownership monitoring and on operational service delivery
• integration of the CCMAU’s functions within the Treasury, to create a single unit that provides ownership monitoring and performance advice to Ministers, and
• consolidation of CCMAU and the Treasury’s monitoring functions.

We will continue developing the organisation so that it demonstrates the responsiveness and adaptability that we expect of all State sector agencies.

Leadership and Management

The leadership review in the first half of the year defined key Treasury behaviours that are crucial to us achieving our organisational goals. The Treasury's managers created a leaders' charter and a programme of work commenced to support leaders to act in ways that will create a culture that will more effectively deliver us our results.

Our intention in 2009/10 to create measures to gauge improvement in leadership and management was delayed as we implemented the outcomes of the leadership review. As a result of the implementation of this review, our senior leaders have a new emphasis and we have commenced using specific and targeted survey tools to create measures of leadership impact.

Two new learning programmes were designed and delivered to build the Leadership and Management Foundations Programme for new managers and the Emerging Leaders Programme for emerging technical and programme management leaders and people leaders outside formal management roles.

In early September, the Secretary announced the appointment of three non-executive directors to the Board. The trio, Paul Baines, Susan Macken and Joan Withers, are experienced company directors who will bring a great deal of governance and commercial wisdom to the Treasury's top table. The Treasury has worked closely with the SSC in establishing the Board.

Strategy and Policy

In 2009/10 we introduced advisory forums, which are an opportunity to debate strategic issues across the Treasury. The forums develop advice for the ELT (and the Treasury Board that is being established). The forums are a means to generate greater cross-Treasury discussion and resolution of issues. This work is assisted by a Strategic Policy Advisor, whose role is to pull together and drive strategic policy thinking across the Treasury.

We continue to use the Treasury Quality Standards for Policy Advice as a key component in staff training and setting expectations in individual work plans. The focus for the future will be to continue to use the learning from quality reviews to further develop the expertise, tools and systems we need to deliver the best advice to Ministers that we can. In 2010/11 we intend to conduct a second external review of the quality of a selection of our written advice to formally assess our performance against the Quality Standards, following on from a similar review in 2008/09.

External Engagement

Effective external engagement is an important component of the work that the Treasury does. In 2009/10, we adopted a more systematic and deliberate approach to our external engagement. The appointment of the two new Deputy Chief Executives, and the redefinition of the Deputy Secretaries' roles, has lifted the effectiveness of the Treasury's external engagement.

By building relationships with a range of stakeholders we aim to encourage an informed two-way flow of information and to significantly strengthen our understanding of real-time economic trends, and emerging views among different sectors operating in the economy. Through this engagement with Ministers, government agency leaders, business leaders, local government and community organisations, sector representatives, unions, commentators, financial sector leaders and others, the Treasury fulfils its responsibility to encourage and to facilitate evidence-based discussion and decision-making in both the public and private sectors.

During the 2009/10 year the organisation introduced a Customer Relationship Management-type model for managing its interactions with external stakeholders, and it is providing the basis for a better-informed, better-connected Treasury. A lot of this engagement is low-key and informal, taking the form of one-on-one meetings or boardroom presentations. But during the year the Treasury also delivered a number of important presentations and keynote speeches. The Secretary to the Treasury made a key address in July 2009 on public sector performance in which he challenged the sector to get out of its comfort zone. There were also addresses to manufacturing, employer, banking, legal and other audiences which provided an opportunity to set out the critical issues facing the New Zealand economy.

Value for Money and Organisational Efficiency

The Treasury is committed to managing in a value-for-money manner.

The Treasury continued to ensure we provide efficient and effective services to Ministers through the year by:

• ensuring our support structures were delivered efficiently and effectively
• investing in people and systems to develop the skills needed to deliver
• continuing to improve the efficiency of our processes and systems to reduce cost of our services, and
• reviewing the Treasury’s organisational structure alignment to better meet the future needs of Ministers.

For example, one of the changes was to implement Cabinet's agreement that the CCMAU would no longer be a semi-autonomous body. This allowed the Treasury to bring together all Treasury and CCMAU monitoring, appointments and governance functions into a consolidated unit called the Crown Ownership Monitoring Unit (COMU) as well as to make savings in the way the group is supported. This change, which supports elements of a number of work programmes from across the Treasury's three outcomes, allows the Treasury to increase its flexibility in responding to changing priorities and ensure it is efficient and effective, and recognises the need to think about the longer-term positioning of the public sector management system, its overall public sector productivity agenda and create synergies between the commercial and non-commercial areas of the public sector.

The Treasury has been participating in the benchmarking work under the BASS programme and the all-of-government procurement reform. Ongoing assessments arising out of these projects will assist us to adopt best practices across our operations.

During the year the Treasury continued to reprioritise its expenditure within its core programmes, building on changes made in Budget 2009, to ensure that it is well placed to advise Ministers on medium-term and longer-term challenges and priorities.

Work also began on developing a medium-term financial strategy for the Treasury and this work will continue in 2010/11. Steps already completed include the implementation of detailed out-year budgets, identification of key future costs pressures and identification of options on rationalisation.