Agency / Sector Workforce Strategy Guidance
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1 Agency / Sector Workforce Strategy Guidance October 2011
2 State Services Commission October 2011 ISBN Copyright / terms of use Crown copyright 2011 This work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. In essence, you are free to copy, distribute and adapt the work, as long as you attribute the work to the State Services Commission and abide by the other licence terms. To view a copy of this licence, visit /. Please note that neither the State Services Commission emblem nor the New Zealand Government logo may be used in any way which infringes any provision of the Flags, Emblems, and Names Protection Act Attribution to the State Services Commission should be in written form and not by reproduction of the State Services Commission emblem or New Zealand Government logo.
3 Contents Introduction... 2 Background... 2 What is the purpose of developing a Workforce Strategy?... 3 What should the Workforce Strategy include?... 3 Who is the audience for the Workforce Strategy?... 3 What are the principles underpinning Workforce Strategy development?... 3 How does the Workforce Strategy fit with other organisational strategies and plans?... 4 What are the benefits in this for agencies?... 4 What are the benefits in this for the system as a whole?... 5 What are the possible challenges?... 5 What is the broader picture?... 5 What support is available?... 6 Agency Workforce Strategy: Guidance Framework
4 Introduction This guidance is intended to assist agencies and/or sectors to develop a Workforce Strategy that supports achievement of their organisational direction and business strategy. The guidance recognises that most agencies already have well defined business strategies and plans. The intent is to provide an opportunity for agencies to ensure that they have considered the workforce requirements arising out of their business strategies and plans and not to duplicate existing work. Many agencies will have already undertaken much of this thinking, and will have the information in various forms. This guidance does not intend for work to be repeated, but rather that existing workforce related strategies are consolidated and key drivers highlighted. We recognise that agencies will be in different stages of undertaking this work and that a one size fits all approach will not work. The guidance is not intended to be used as a template. It is expected that the guidance will be developed further based on feedback from agencies following the first round of strategy development. Documenting a Workforce Strategy will meet Cabinet s expectations that all agencies will produce an organisational development plan to accompany and support their Four-year Budget Plans (CAB Min (11) 24/5A refers). Background The State sector s workforce is its single most valuable resource, as well as its single biggest cost, accounting for up to 70% of State sector agencies funding. Recent events have raised the focus on workforce strategy development, including: 1 The current and medium term fiscal and economic environment means that if agencies are to deliver their business strategies within decreasing baselines significant changes will be required. Incremental change to business as usual is not likely to be sufficient transformational change is needed. 2 In June 2011, resulting from a general lack of confidence that agencies had real plans for how they were going to get to their stated future shape, Cabinet agreed that agencies should produce an organisational development plan to accompany and support their Four-Year Budget Plans (CAB Min (11) 24/5A refers). 3 The 10 Performance Improvement Framework (PIF) reviews that have been completed have found that there is much room for improvement in the People Development and Strategic Leadership areas. This guidance is for development of a Workforce Strategy and provides an overall framework that agencies can use. The framework is presented as a series of questions to be addressed and should not be used as a template. 2
5 What is the purpose of developing a Workforce Strategy? A Workforce Strategy is a core component of an agency s business strategy and change agenda. The purpose is to assist agencies to plan for the workforce needed to deliver better results, now and in the future, for New Zealanders and the government of the day. There is an expectation that agencies will produce a Workforce Strategy that shows alignment between business priorities, projected results and a planned approach to managing the people aspects of their business in the medium-long term. What should the Workforce Strategy include? Workforce Strategies should articulate (in summary) the business change agencies are seeking and a desired future state. The strategy should show how agencies intend to manage the workforce implications of the required business change and proposed actions to achieve the change within allocated funding, linked to agencies Four-year Budget Plans. Who is the audience for the Workforce Strategy? Aside from the agency itself as primary audience, the initial audience for Workforce Strategies is the State Services Commission (SSC) and other central agencies. SSC will consider the strategy and work with you to confirm and provide advice to Ministers. Agencies may be asked to meet with Ministers. Where this is the case, SSC will work with you to assist presentation of key elements of your agency s Workforce Strategy. SSC will also maintain an overview of strategies across sectors and years to monitor trends. What are the principles underpinning Workforce Strategy development? The following principles should guide agencies workforce strategy development: 1 Business strategies, priorities and operating models should drive and shape the Workforce Strategy 2 The Workforce Strategy should reflect and inform an agency s planned approach to change including business and workforce innovation, productivity and initiatives around workforce flexibility 3 Workforce Strategies should take into account the whole organisation; its overall business strategy and its total environment 4 Strategies should take into account relevant wider Government settings including the Government s economic and fiscal strategy and change initiatives 5 Workforce Strategies should support sustainable public services and reflect best practice public management e.g. best sourcing strategies; flexible workforce etc 6 Workforce Strategy timeframes may vary across agencies but should be for a minimum of four years 7 The Workforce Strategy should complement and not repeat work that agencies have already done 3
6 8 Development of Workforce Strategies should be an agency-wide conversation led by senior leaders, and involving key managers and staff supported by strategic planning and human resource functions. How does the Workforce Strategy fit with other organisational strategies and plans? The agency s existing business strategy and operating model will drive its Workforce Strategy. We suggest that agencies summarise and highlight key business drivers with workforce implications and use these to frame their Workforce Strategy. Where agencies have a range of business areas it is likely that they will: need to identify current state within each business unit then identify what change is proposed in each area then build up a picture of the whole. A Workforce Strategy represents an agency s view of its workforce approach at a point in time. It is anticipated that agencies will develop their Workforce Strategies in an iterative process over a number of years. After the development of their initial Workforce Strategy, agencies will likely integrate their workforce strategy development into their overall business planning in future years. How agency strategy, planning and budget documents relate to each other PM / Ministerial exchange of letters on priorities Strategic planning documents, including Financial Strategy Capital Intentions Four year Budget Plans Accountability documents Estimates and Information supporting the Estimates Statement of Intent Budget Strategy Performance Measurement Frameworks People/HR Strategy Regulatory Plans Agency/Sector Workforce Strategy Output plan Policy plans Please note: that this diagram shows the intended relationship of documents rather than timing and that not all documents relate to all agencies. Source: The Treasury, Published: September 2011 What are the benefits in this for agencies? A Workforce Strategy will add value to agencies by: Confirming that the workforce requirements of their business have been considered and planned for, and are achievable Providing agencies with a whole of organisation view of their workforce needs for the future 4
7 Assisting agencies to identify potential gaps in their planning Providing agencies with another means of communicating the future to staff Aligning with the Four-year Budget Plan which could assist in supporting a case for shifting funding from lower value activity Aligning with the PIF process so that improvements in Workforce Strategies lead to better outcomes in the PIF lines of enquiry and vice versa Providing a mechanism for communicating to Ministers the strategy that agencies are using to respond to workforce pressures in an environment of constrained funding. What are the benefits in this for the system as a whole? Increasing the potential for improving the overall workforce capability in the system, through brokering and linking across agencies as this work is undertaken. Fostering engagement across agencies for a cross-system view. As Workforce Strategies are developed across agencies opportunities may emerge to develop a broader understanding of and possible response to cross-sector and whole of system workforce issues. What are the possible challenges? Agencies may also need to resolve some challenging issues to ensure that they get the most benefit from this work. This may include: Clearly articulating current and desired future state, and how to get there Finding the time to develop a Workforce Strategy amongst many competing priorities Encouraging conversations and decisions about future business priorities Ensuring that the Workforce Strategy is integrated and reflects a whole of agency approach Considering the implications of an agency s own workforce strategy approach for other agencies within a sector Managing the expectations of Ministers and other key stakeholders. What is the broader picture? Agencies should consider and comment on how their Workforce Strategy connects with other activity, for example: Better Public Services Four-year Budget Plans 5
8 Performance Improvement Framework (PIF) Better Administration and Support Services (BASS) Scott Review of Policy Advice Other sector specific activity. Agencies should also highlight potential workforce linkages within or across sectors (for example, future opportunities to consider workforce requirements jointly where there are like skills). The SSC Workforce Strategy Team has a role in exploring such linkages as part of the system-wide overview that may emerge from agencies Workforce Strategies. What support is available? A Framework and supporting questions follow to assist agencies to develop their Workforce Strategy. We recognise that many agencies have already done significant thinking about their business and workforce capacity and capability requirements. The Framework aims to assist agencies to consider the range of questions relevant to a developing workforce strategy. For example, agencies are not expected to repeat work around their business strategy and planning but should reflect in their workforce strategy key aspects that are relevant to thinking through their workforce approach. Those agencies that have been asked to take a sector approach to workforce strategy development should apply the framework questions from a sector-wide perspective. The SSC Workforce Strategy Team is keen to support agencies where this would assist. Please contact your agency s key contact in the SSC Workforce Strategy Team. 6
9 Agency Workforce Strategy: Guidance Framework Business Context What are the key business drivers we need to consider when developing our workforce strategy? Environment What internal and external factors impact on our organisation and our delivery now? What changes do we expect to our future environment? What is our business strategy? What results do we want to achieve? Business Strategy Does our business strategy position us to achieve the future results we need? What is our desired future state? What is our operating model(s)? Are we expecting to change our operating model? Operating Model What will our operating model look like when we have achieved our desired future state? Workforce Strategy How will we match our workforce to our business strategy to achieve our desired future state? Information and Analysis What information do we need to inform our decisions on our workforce? Culture What behaviours people and organisational do we need to support our business model and operating model? How will our culture look when we have achieved our desired future state? Change Leadership What is our change strategy? How are we preparing our people for change? How does our change strategy take us to our desired future state? Capability What is our workforce capability now? What workforce capability do we need to achieve our desired future state? How will we get there? Capacity (numbers) What is our current workforce capacity? What workforce capacity will we need in the future? How will we progress any change that is needed? Employment Framework Are our HR and ER strategies well positioned to support achievement of the business results we need? Measures Do we have the right measures to assess our business and people performance? 7
10 Guidance Framework: The more detailed questions below should be covered in developing your workforce strategy Business context Environment - What are the external and internal factors influencing our organisation? What are the policy, legislative, regulatory and financial impacts on us? - What have we committed to in our SOI and Four year Budget Plan? - Are there potential changes we need to consider around public expectations; demographic shifts; technology; infrastructure etc. Business Strategy Operating Model - What are our organisation s vision, purpose and goals? What is our business strategy? What changes have we signalled? - Is there growing/ decreasing demand within/across our business lines? Are any new business lines anticipated? What will we start/stop/continue doing? What (if any) is our disengagement strategy where required? - What does our funding track look like (including expected cost pressures)? Have we sufficiently challenged the status quo to ensure that we can manage within decreasing baselines? - How will we work with other agencies? How can we deliver on our customer expectations (e.g. Ministers, public)? - What is/are the operating model(s) that support our business strategy? Are our operating models going to change? What will be the impacts of any changes? Are we looking to outsource any parts of our business; public private partnerships etc? - What aspects of our business are core; which are discretionary and which are some mix of the two? What might this mean for our operating model? Workforce context Information & Analysis Culture Change Leadership - What is our assessment of our workforce strengths and weaknesses? What are the opportunities and threats around our workforce? - What workforce data/information do we need for workforce planning purposes? (For example: occupational categories headcount /FTE, gender, ethnicity, age structure) - What information do we have on how productive we are and whether we are improving? - Where will our people supply come from? What is the lead in time to produce the skills we need? - What external information do we need, and do we have it? (For example: labour market dynamics; supply and demand factors. What are our forecast wage cost pressures? CPI +/?) - What people and organisational behaviours do we need to achieve our business results? Does our current culture foster the environment and levels of workforce engagement needed to support our business strategy? - What culture do we want for the future? What is our strategy to achieve the culture we need? How will we maintain/develop the staff engagement we need? - How will organisational change impact on organisational culture? How will this impact be managed? - What is our change strategy? What organisational development strategies do we have in place? - What resources will be needed to ensure the success of our change programme? - What is our strategy to engage our staff around the change? - How will we enable our employees to contribute their expert knowledge to the change? - How will we engage unions with the organisation s direction and in the change as it occurs? 8
11 Capability - What s our strategy for stakeholder communication around the change required? - How does this impact our funding track? - What workforce capability do we have/need to meet our current business requirements (e.g. occupational groups/competencies and mix of competencies generalists/specialists; junior/senior)? - Based on our future business strategy and operating model do we need to grow our workforce capability? How will we achieve the capability we need (develop/recruit/outsource/contract in)? - How will we grow our leadership capability? Do we need to develop our capability for leading change? Do we need a different capability set to deliver the change? - How does our approach to capability impact our funding track? Capacity - What is the core workforce required to deliver our current business (i.e. numbers; categories, mix)? How will we meet our ongoing capacity requirements (employ/contract in/outsource)? - How many people, and which occupational categories and mix (more of /less of) will we need in the future? How do we know this is affordable? Within FTE cap? What does the transition pathway look like? - How will we source, attract, engage and/or grow the people we need? Are we confident that we will be able to source the people we need when we need them? Are we competing with other agencies/sectors for the same skills? Are there skills that are in short supply? How will we keep the people we need? - How does our approach to capacity impact our funding track? Employment Framework Measures - What levers do we have to support achievement of our business goals? What are the priority people strategies we will focus on to achieve our business strategy? - Are our HR and ER strategies positioned to deliver the workforce capacity and capability we need? How will we ensure that our remuneration and bargaining strategies help to deliver on our core business? - Do we have the right organisational controls in place to ensure we stay within baseline? - How does our employment strategy impact our funding track? - Do we have the right measures to monitor our business and people performance? How do we know we are on track to achieve the results we are targeting? - What are our people risks? How are we managing/mitigating these? - What are the key dependencies? - Is there value in benchmarking with others to assist in assessing our performance? Who are our appropriate benchmarking partners? Are there international comparisons that would be useful? 9
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