Human Resources

Commentary

By Lynley Sinclair, Group Manager, Human Resources, People and Business Capability, Ministry of Education

New Cabinet expectations regarding multi-year workforce plans to accompany four-year budget plans highlight Human Resources (HR) strategic role. These documents show how agencies will manage the HR implications of diminishing baselines and planned business changes. Agency strategies for managing costs and implementing new and better service delivery models requires identifying and acting on ways to manage the number, capability, compensation, and performance of their people.

In addition to an increased focus on strategic advice and consideration of longer-term workforce requirements, HR practitioners share a stronger willingness to work collaboratively to deliver better HR services at lower cost. Greater awareness of HR service performance gaps, willingness to identify and tackle the issues underlying these gaps, and buy-in to opportunities for collaboration and transformation are all signs of a collective shift in mindset. Some of this change is driven by external pressure to reduce spending on internal services, and much of it is driven by a sincere desire among HR professionals to build a stronger and more sustainable public service for New Zealanders.

This report shows that, while some individual agencies have made substantial gains, overall improvement in FY 2010/11 is limited. The overall picture shows some cost reduction (3.8 percent or $6.3 million). And while the number of employees per HR full time equivalent (FTE) has increased overall by 3.1 percent, the cost of HR per FTE has increased by 8.5 percent and continues to lag international comparators. These changes fall short of the change called for by Government in efficiency and spending on the back office.

While reported improvements are encouraging, our overall performance shows we need to work together to address systemic obstacles to performance if we are to reach leading levels of efficiency and effectiveness across government. These obstacles include:

• Diversity in our policies and processes creates duplication and waste
• An overall low level of automation requires manual, labour-intensive work steps
• Multiple, duplicative information systems create a complex and costly ICT environment
• Gaps in HR capability diminish the strategic contribution that HR can make to business and service performance.

As each year of HR performance data is compiled, and as agencies undertake more detailed, process-level HR benchmarking studies, it is evident that agencies will need to cluster together at an appropriate level of scale to reach leading practice levels of efficiency and effectiveness.

There are a number of cross-agency HR service improvement initiatives underway:

• Ten agencies have made strong progress in working together to pursue HR service transformation. At the time this document was written, progress was as follows:
  1. A process-level benchmarking exercise was completed for the workforce planning, workforce development, recruiting, and exit processes. This study revealed specific opportunities for joint initiatives that can lift performance over the short to medium term and was a critical first step in an agency-led HR response to the challenge of delivering better HR services at a lower cost.
  2. The measurement agencies are now working together to identify which performance improvement initiatives to progress. A robust, evidence based approach is being taken, utilising both local and international knowledge.
• The Department of the Prime Minister and Cabinet, the State Services Commission and the Treasury are implementing shared services for administrative and support services, including HR. This initiative will minimise risk through building greater resilience and strengthening capability, develop better services and strengthen performance, and improve efficiency.
• All-of-government solution for external recruitment services. [9]As part of the New Zealand Government Procurement Reform Programme, the Ministry of Economic Development is leading an initiative to implement an all-of-government contract for external recruitment services in FY 2011/12.

The cross-agencies initiatives that leverage the sector's critical mass will enable the sector to make a step change towards greater HR efficiency, effectiveness, and cost reduction. I encourage the agencies involved in this study to use their results not only as a basis for their own continuous improvement, but also as a catalyst to seek out collaborative performance improvement opportunities that will enable significant HR performance gains across the sector.