Public Sector Management (PSM) Program Unit 4. Managing down: Operational Management in the Public Sector. Dr Teresa Marchant

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1 Public Sector Management (PSM) Program Unit 4 Managing down: Operational Management in the Public Sector Dr Teresa Marchant Centre for Governance and Public Policy

2 First published: June 2005 Revised in April 2009 by Paula Cowan and Teresa Marchant Editor: Rosemary Nicholls. Rosemary Nicholls and Associates RMB 5277 Tames Road Strathbogie Vic 3666 Phone Fax Design and Artwork: Momentum Marketing Solutions 28 Euler St Aspley Qld 4034 Phone: The author would like to thank Associate Professor Michelle Wallace for her helpful review of these materials before their publication. Thanks also to Dr Catherine Althaus and Matthew Hogan. Commonwealth of Australia 2005 This work is copyright. Apart from any use or fair dealing for the purposes of private study, research or criticism as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Attorney General s Department, Robert Garran Offices, National Circuit, Canberra ACT 2600 or posted at

3 Contents Unit 4: Managing Down: Operational Management in the Public Sector... 1 Topic One: Strategic Management Strategic Management: Conceptual Models Strategic Management and the Public Sector Levels of Strategy and Line of Sight Techniques and Models Further Critical Analysis From Strategy to Action to Operations Summary...29 Required Reading...30 Further Reading...30 Topic Two: Organisation Structure and Culture Organisation Structure Organisation Structure in the Public Sector Critique and Emerging Ideas: Networks Organisation Culture Summary...64 Required Reading...64 Further Reading...65 Topic Three: The Learning Organisation and Knowledge Management Information Resource Management From Information to Knowledge Management Soft and Hard Approaches to Knowledge Management The Learning Organisation Public Sector Learning Organisations Summary Required Reading Further Reading Topic Four: The Budget Cycle and Financial Management General Concepts and Definitions Political, Economic and Social Functions of the Budget Financial Performance Performance Framework Accruals-Based Resource Management and Outcomes and Outputs C O N T E N T S i

4 4.6 The Government Budget Process Managing Budget Appropriations Within Agencies Managerial Functions of Budgets The Significance of Knowing Costs Critique of Budgeting and Accrual Output Approaches in Government Summary Required Reading Further Reading Topic Five: Strategic Human Resource Management SHRM and Links to Organisation Strategy Functions of HRM and Links to HR Planning or Workforce Planning Public Sector Application Critique and Challenges for SHRM Summary Required Reading Further Reading Topic Six: Performance Management International Perspectives Government and Agency Accountability in Australia What Constitutes Performance? Criticisms, Constraints and Challenges Emerging Views: Public Value Replacing New Public Management Strategic Framework and Performance Management One-on-One Performance Management Performance Development Team Performance Development Summary Required Reading Further Reading Appendix Topic Seven: Leadership and Teams Managers and Leaders: What s the Difference? Genesis of Leadership Theories Creating a Vision Gender and Leadership The Public Sector Leadership Context New Research on Leadership Creating and Leading High-Performance Teams ii P S M U n i t 4 : M a n a g i n g d o w n : o p e r a t i o n a l m a n a g e m e n t i n t h e p u b l i c s e c t o r

5 7.8 Practical Team-building Techniques What is the Team Literature Saying at the Point of Publishing Summary Required Reading Further Reading Topic Eight: Job Satisfaction and Motivation Job Satisfaction and Presumed Effect on Performance What Do Employees Want? Morale Motivation Public Sector Motivation (PSM) Equity Theory Engagement Summary Required Reading Further Reading Topic Nine: Change Management and Innovation Underlying Concepts the Nature of Change Drivers of Change Types of Change the Dunphy-Stace Model Seven Steps in Planning Effective Change Planning for Change in the Public Sector Resistance to Change Overcoming Resistance to Change Transition Learning from Change and Innovation Evaluation Summary Required Reading Further Reading Topic Ten: Project Management Why Project Management in the Public Sector? Project Life Cycles Projects are a Cycle of Repeated Processes Phase 1: Initiating the Concept Stakeholders Local, Virtual, Visible and Invisible Teams Phase 2: Developing Design C O N T E N T S iii

6 10.8 Risk Management Project Planning Phase 3: Implementing the Project Phase 4: Terminating or Closing Summary Required Reading Further Reading Bibliography for PSM Unit Case Studies Towards Agile Government Contracting Out Workplace Services Delivery to the States Figures and Tables Figure 1.1 A model for the elements of strategic management...6 Figure 1.2 Simple conceptual model of the overall strategic management process...7 Figure 1.3 A more detailed conceptual model...8 Figure 1.4 Conceptual model showing more of the complexity and dynamics of strategic management and planning...9 Figure 1.5 Relationships between values, vision and mission and levels of objectives...14 Figure 1.6 Relationships between strategy, planning and levels...15 Table 1.1 SWOT analysis...17 Figure 1.7 McKinsey 7-S model...19 Table 1.2 McKinsey s seven elements...20 Figure 1.8 The principles of a strategy-focused organisation...22 Figure 1.9 From organisational vision to desired outcomes...23 Figure 1.10 The BSC...24 Figure 1.11 Strategic management, operational management and resource management...26 Figure 1.12 The resource management cycle...27 Table 2.1 Elements that produce various organisation structures...49 Table 2.2 Contrasting mechanistic and organic designs...52 Table 2.3 Comparing different ideas about the elements and purpose of culture...58 Figure 3.1 Systems view of knowledge management Figure 3.2 The knowledge spiral Figure 3.3 Single-loop and double-loop learning Figure 3.4 Three levels of learning Table 3.1 The laws of the fifth discipline systems thinking Figure 4.1 Three dimensions of government budgeting Table 4.1 Levels of analysis in government budgets Table 4.2 Functions of budgets iv P S M U n i t 4 : M a n a g i n g d o w n : o p e r a t i o n a l m a n a g e m e n t i n t h e p u b l i c s e c t o r

7 Table 4.3 Key performance measurement concepts Figure 4.2 Performance framework Table 4.4 NT Financial Management Framework Figure 4.3 Examples of a government financial management framework Figure 4.4 Budgeting structures Figure 4.5 Traditional financial reporting view vs. output cost reporting view Figure 4.5 Activity process flow Table 4.5 More details of TBL Figure 5.1 The fit between strategic SHRM and the functions of HRM Figure 5.2 Elements of a strategic human resource management framework Figure 5.3 Relationship between strategy and SHRP Figure 5.4 Workforce planning process Table 5.1 Pros and cons of individualised HRM Table 5.2 Characteristics of NSW public sector workforce Figure 5.5 Maximising the value of HRD Figure 6.1 Poor performance of US government according to citizen opinion Figure 6.2 A basic systems model of public sector production, service or policy processes Figure 6.3 Translating processes to outcomes Figure 6.4 Reporting performance indicators from various perspectives for different audiences Figure 6.5 Integrated performance management system Figure 7.1 Integrating leader characteristics, focus and roles with transformational and transactional theory Figure 7.2 Teams as a subset of groups Figure 7.3 The team behaviour model Figure 7.4 The 9 Belbin team roles Table 7.1 Practical team-building diagnostic Figure 8.1 Four measures of workforce effectiveness Table 8.1 What employees want Figure 8.2 Reasons people join the public service (UK) Figure 8.3 Balancing up inputs and outputs or efforts and rewards equity theory in action Table 9.1 Mindsets or different perspectives on change and their strengths and weaknesses Table 9.2 Scale of change Table 9.3 Four levels of consultation deployed by change management style or leadership style Figure 9.1 Five different types of change Figure 9.2 Seven factors needed for effective change Figure 9.3 Symptoms of ineffective change when any of the seven factors is missing Figure 9.4 Seven individual sources of resistance to change Figure 9.5 Six organisational sources of resistance to change Table 9.4 Ways of overcoming resistance to change C O N T E N T S v

8 Figure 9.6 Transition stages Figure 9.7 Feelings involved in transition Table 9.5 Disengagement, dis-identification and disenchantment in transitions Table 9.6 Getting though the neutral zone Table 9.7 Recovering and starting over Table 9.8 Diagnosing complexity of problems and risk of solutions in achieving innovation Figure 10.1 Complexity of project management Figure 10.2 Four-phase project life cycle Figure 10.3 Four phases of project life cycle Table 10.1 Consolidated phases of the project life cycle with details for each phase Figure 10.4 Stakeholders Figure 10.5 Power and interest of stakeholders Figure 10.6 The stakeholder circle Table 10.2 A simple risk management matrix Figure 10.7 Multi-level or hierarchical planning Figure 10.8 First example of a graphical WBS Figure 10.9 Second example of a graphical WBS format Table 10.3 Performance indicators vi P S M U n i t 4 : M a n a g i n g d o w n : o p e r a t i o n a l m a n a g e m e n t i n t h e p u b l i c s e c t o r