Capability Reviews of the Ministry of Youth Affairs and the Ministry of Women's Affairs

Proposal

1 This paper reports on the reviews of capability needs of the Ministries of Women's Affairs and Youth Affairs and makes recommendations to improve the capability of these Ministries to perform their role and purpose effectively and efficiently.

Executive Summary

2 The review identifies capability risks for the Ministry of Youth Affairs (MYA) that lie primarily outside its direct control, i.e. generating the necessary leverage and influence over other departments to adopt the Youth Development Strategy Aotearoa (YDSA). Specific capability gaps identified are policy capability and capacity, business support systems and relationships across government.

3 The recommended option for improving the performance of MYA and meeting its capability needs is to merge it with the youth policy functions of the Ministry of Social Development (MSD) and create a Ministry of Youth Development (MYD) within MSD, effective 1 October 2003.

4 While MYA has been performing well this option will further enhance their capability and provide opportunities to lift their performance even higher through the synergies and influence from being formally linked to the major social sector player. Savings from current MYA corporate functions will be retained in MYD and used to fund new policy positions or programmes, depending on agreed priorities.

5 The review identifies the capability needs for the Ministry of Women's Affairs (MWA) as largely internal and under its direct control: improving culture, leadership, management systems and policy capability. These have had major external impacts on the credibility and reputation on the Ministry and reduced its ability to influence other government departments.

6 The recommended option for improving the performance of MWA and meeting capability needs is, in the first instance, to internally strengthen the Ministry, under the leadership of a new, change-management focused chief executive, and as a second order step examine the feasibility of implementing virtual administration initiatives. This will include consideration of working with other government departments on collaborative work programmes and possible outsourcing of some business support functions as the Ministry's performance and credibility improves.

7 Consideration was given to possible options for structurally linking MWA to another department however MWA does not have sufficient synergies and common interests with a single department. It has an overarching cross-governmental focus and outcomes that are most likely to be achieved by concerted internally focussed rebuilding of its capability, which will then provide an ability to better meet its external relationship needs.

Background

8 This review was mandated by a Cabinet decision on 10 March 2003:

"Ministry of Youth Affairs/Ministry of Women's Affairs: report to the Cabinet Policy Committee, by 30 June 2003 on the capability needs of Ministry of Women's Affairs and Ministry of Youth Affairs and structural and non-structural change options including "virtual administration" to build capability while recognising the variety of departmental relationships that the small population Ministries are required to maintain, and the extent to which the results they achieve are dependent on the cooperation and actions of other Ministries." [CAB Min (03) 8/3A refers]

9 Based on the role and purpose of each Ministry the review:

• examined the capability needs each Ministry has to deliver its outputs, now and in the future to achieve outcomes (the description of the capability needs was informed by extensive consultation with governmental stakeholders, including management and staff);
• developed criteria to evaluate options to enhance the capability in each Ministry;
• identified structural and non-structural (virtual administration and enhancing the status quo) options to build and maintain capability, and their associated risks; and
• evaluated these options against the criteria.

10 The review work programme was led by the State Services Commission (SSC) and involved a project group of representatives from the Treasury, the Department of Prime Minister and Cabinet (DPMC), the Public Service Association (PSA) and the chief executives of both Ministries. Staff of both Ministries have been involved through the chief executive.

Findings - Capability Needs

11 Firstly the review considered the capability needs as against each Ministry's purpose and outputs, "capability to do what?" For MYA the capability needs were assessed against its core purpose and outputs of youth policy, youth development programmes and communications. For MWA the capability needs were assessed against its core functions of policy and a women's nominations service. In addition, the review considered the current level and state of each Ministry's capability.

12 Although there are a few capability issues common to both Ministries, their respective capability challenges are quite distinct. Indeed, the differences in the capability issues faced by each Ministry are greater than those they share.

13 Areas of commonality include:

• recruitment and retention issues often faced by small policy agencies;
• access to, and willingness of larger government agencies to include youth development and women's issues as priorities in their policy work; and
• degree of reliance for effectiveness on reputation and credibility with other agencies.

14 The distinguishing features that have led to different recommendations are as follows:

• For the Ministry of Youth Affairs the policy capability is not aligned to current activities - the move to implementation of the YDSA means more senior policy and government relationship related competencies are required. Business support systems and resources are fit for purpose but too lean to support future needs. Relationships across government are good as far as they go, but performance is hindered by insufficient capacity.
• For MWA the nature and mix of capability issues is quite different. MWA lacks a clearly identified and articulated focus (it exhibits a mix of advocacy and policy focus), and has not clearly identified and articulated priorities. Policy capability is limited in part because MWA is not attractive to skilled public servants and there has been a lack of well-defined policy development processes. There is a need to recruit or develop policy staff and managers with strong analytical, strategic and relationship management skills and a commitment to the Public Service values.

15 Within MWA, management practices and processes such as recruitment and performance management processes have had limitations. The management structure lacks balance and is overly large. The internal culture has been driven more by ideology/advocacy, than being evidence-based. Some staff exhibit distrust of management and of external stakeholders, and demonstrate a limited understanding of and commitment to whole of government approaches and Public Service ethics and values. Cross agency relationships are consequently weak and reputation and credibility weak.

Development and Evaluation of Options

16 Evaluation criteria were developed to assess potential options for each Ministry and identify the trade-offs and risks of each option. The options ranged from status quo to full absorption into a larger department. The evaluation criteria included effectiveness and efficiency requirements (including financial implications); stakeholder implications, the wider environment each Ministry operates in, taking into account the extent to which the achievement of outcomes is dependent on the cooperation and actions of other Ministries, and the range of departmental relationships each Ministry requires. The latter two were identified in the Cabinet decision mandating the review as essential criteria for the review [Ref: Cab Min (03) 8/3A].

Options for the Ministry of Youth Affairs

17 The role and purpose of the Ministry, as defined at its establishment in 1988, is to:

• ensure the special needs of young people did not become secondary to other policy priorities;
• support young people to influence their political environment and voice their concerns; and
• improve analysis of the social and economic impact of policies on young people.

18 MYA has strengths, such as a positive youth development and achievement culture; strong relationships with the youth sector, and a clearly articulated strategy, focus and priorities. However, it has ongoing, unfilled people capability and capacity needs, and struggles to maintain cross-government relationships. Therefore, the status quo is not seen as viable. Similarly, full absorption of the Ministry's functions across a range of other departments is not seen as appropriate or feasible to deliver Government's mandate for youth development.

19 The following options were evaluated as most likely to address the capability gaps effectively:

• internally focused enhancement of the status quo to meet specific capability gaps;
• virtual administration using a mix of structural outsourcing and/or formal collaborative policy work programmes with other departments and;
• structural change by merging MYA into a government department with relevant synergies and shared community of interests, in this case MSD.

Enhancement of the Status Quo

20 This is a non-structural solution, involving internal change only to the Ministry, resolving critical problem areas of policy capability and capacity, cross-government relationships and business support.

21 While this is likely to address issues in the short term, there is a real risk that this option is not durable over time. It is likely that further investment would be required in the future to maintain any gains. Consequently, enhancement of the status quo is seen as a partial solution that needs to be supported by other options.

Virtual Administration

22 Virtual administration options can be both structural and non-structural. These options are about agencies getting together where it makes sense to do so on some functions/ activities, e.g. via formal memoranda of understanding setting up collaborative work programmes or by outsourcing some functions to another department (structural change), and gaining the capability required to deliver outputs and achieve required results.

23 Virtual administration can be applied to either the back office (business support) and/or the front office (policy and delivery) activities. The option that would maximise MYA's capability would be to contract back office business support functions to another department and collaborate with other departments to develop shared work programmes in relation to youth policy.

24 Due to the resource intensive nature and a dependency on the will of other departments to participate in joint work programmes and to use the youth development framework, there are questions as to how well this option would substantially increase the Ministry's performance. MYA would remain vulnerable to the risks of a small Ministry such as difficulty in attracting and retaining good policy staff and maintaining a depth and breadth of policy work. Consequently, it is not seen as the best option for meeting MYA's capability needs.

Structural Merger with another Department (Recommended)

25 The structural merger of MYA into MSD to form the Ministry of Youth Development, that keeps a unique focus on youth, is considered the best option for improving performance and meeting capability needs. No departments, other than MSD, were assessed as having sufficient synergies and/or shared communities of interest to be a viable "host" agency for the Ministry of Youth Affairs work. A degree of enhancement to existing capability (policy capability and capacity) would be required in addition to the structural changes. There will be some increase in policy capability and capacity through reinvestment of MYA corporate resources into MYD and the allocation of existing resources within MSD's current youth policy function.

26 The merger would involve the following:

• MYA would become the Ministry of Youth Development (MYD) within MSD, with a separate culture and identity distinct from MSD and maintaining its own youth sector non-government agencies (NGA) relationships;
• MYD would be led by a General Manager, appointed by and reporting to the Chief Executive of MSD and be a member of the executive team;
• MYD Policy Unit would combine the current MSD youth policy functions and current MYA functions;
• current MYA policy functions will be resourced to at least existing levels and in line with the requirements of their work programme;
• MYD would pick up MSD's current youth leadership role for cross-sectoral youth policy;
• MYA corporate functions would be taken over by MSD, using MSD systems and strategies. This would, in time, free up approximately $300,000 (based on gross salary costs of corporate staff) to fund new senior policy positions or programmes depending on agreed priorities. It will also provide access to more comprehensive, high quality information management and human resource systems;
• a single Vote: Youth Development (incorporating the current Vote: Youth Affairs and some of Vote: Social Development);

27 The benefits of this proposal include:

• the potential to address the senior policy capability recruitment and retention issues through the 'bigger pool' of staff and improved career options available;
• resources from corporate services could be redirected to policy capacity gaps or youth development programmes;
• opportunities to leverage MSD's wider regional networks, and status as a major sector leader;
• a reduction in existing overlaps and better co-ordination of youth related policy work;
• better coordination of youth development programmes, family support and employment programmes;
• access to MSD's databases and the integrated data sets, and access to MSD's policy research and evaluation capability; and
• improved purchasing and contract management capability.

28 The risks associated with this proposal include:

• the association with another agency may dilute cross sector relationships or subsume relationships with other sectors at non-government agency and government levels;
• potential for disruption to MSD; and
• a youth focus and work programme may be accorded a lower priority on the MSD's chief executive agenda.

29 This merger could take effect from 1 October 2003, with the State Services Commission working with the Chief Executives of the Ministries of Social Development and Youth Affairs, the Treasury, and the PSA in the intervening period to prepare for the merger. All staff (with the exception of the Chief Executive) would transfer to MSD on 1 October with an integration process being managed by MSD. Some MYA positions will disappear or change. The Chief Executive of MSD is committed to completing this transition with few, if any, staff redundancies. (Refer further discussion regarding the State Sector Amendment Bill, paras 57 and 58). The Chief Executive's position at MYA will become redundant.

30 (Withheld as Ministers have yet to make a decision on this matter)

31 The Agenda for Children identified a need for better structures and processes for developing policies and services for children, young people and young adults across the 0-24 year age span, including government agencies working closely together on issues affecting children and young people as a population group. [Cab Min (02) 13/16 refers] The proposed merger here is in line with that direction. The fact that youth policy will be in the same department as child policy also allows for the opportunity to better align child and youth development responsibilities.

32 The effectiveness of the merger and any improvements required could be identified by a review of the merger by SSC within 12 months of its occurrence, reporting back to the Ministers of State Services, Social Development and Employment and Youth Affairs [Development].

Ministry of Women's Affairs Options

33 The purpose of the Ministry, as defined by Cabinet [P (84) M 10 Part 2 to be associated with CS (84) 761 refers] is to:

• advise the Minister of Women's Affairs on the implications of the Government's policies, public sector plans and expenditure programmes in terms of their differential impact on women;
• monitor and initiate legislation and regulations in order to promote the equality of opportunity for women;
• advise the Minister of Women's Affairs of suitable nominees for the appointment of women to statutory bodies and other quasi-government bodies; and
• advise the Minister of Women's Affairs on any matter relevant to the implementation of the Government's Manifesto where this had implications for, or explicitly refers to, women.

34 Identification of capability needs showed that within the Ministry there is some confusion as to how this mandate is implemented and the work prioritised (refer para 13 & 14). Capability needs identified included improving policy development processes, management systems and processes, organisational culture, and cross-governmental relationships. Full absorption of MWA functions across a range of departments, such that there would not be a separate, identifiable entity, was not seen as a feasible given the role and purpose of the Ministry. Without a specific women's Ministry there would not be a sufficient focus for work identifying implications for women from government policy. There is also no natural merger partner that shares sufficient common interests and synergy opportunities.

35 The following options were evaluated as most likely to address the capability gaps:

• enhancement initiatives combined with a structural merger into a government department with relevant synergies and shared community of interests;
• enhancement initiatives combined with virtual administration initiatives for policy and delivery and outsourcing of some/all corporate functions to another department; and
• internally focussed enhancement targeted to specific capability gaps.

Structural Change (combined with Internally focussed enhancement Initiatives)

36 This option would see MWA merged into another department whose chief executive would have responsibility for the Ministry's policy and nominations functions i.e. an agency within an agency. The level of independence, autonomy and separate branding/identity of MWA's functions within the host agency could be maintained, with a separate Vote: Women's Affairs. This would be very similar to what is recommended for MYA. The host agency chief executive would implement initiatives to improve leadership, organisational culture and internal management matters.

37 This option was not considered viable because there is no department with a sufficiently broad focus to match MWA's across a range of sectors. Central agencies were discounted as hosts because of potential conflict of role between whole of government and specific policy advice, the lack of capability and capacity, and the lack of alignment between MWA's outcomes with central agency outcomes.

Virtual Administration combined with internally focussed enhancement initiatives

38 There is a range of options involving collaboration with other agencies for either the back office (business support) or the front office (delivery/output production) end of the agency's activity.

39 Virtual administration options at MWA, with or without internal enhancement initiatives to address leadership and culture issues, constitute risk while there is an insufficient base of policy capability and a lack of credibility with other agencies. However, as policy capability improves and the Ministry is seen to add value, virtual administration options such as joint policy programmes could be implemented. The capability needs at MWA will not be met by virtual administration initiatives alone.

Internally Focussed Enhancement Initiatives (Recommended)

40 This is a non-structural solution focussed on internal strengthening of various aspects of capability. It involves a very specific and targeted change programme led by a new chief executive with the necessary change management and leadership skills to address critical capability problem areas and build on the initiatives already under taken by the current acting Chief Executive, including:

• addressing organisational leadership/culture issues, such as modelling whole of government and public service values and standards;
• building and implementing effective management processes and systems such as performance management; governmental policy development processes; and robust recruitment processes;
• addressing specific policy capability and capacity gaps such as using secondments to gain expert policy analysts, including at the senior level and public service experienced experts for specific projects); and
• developing more effective sector relationships and networks.

41 The explicit focus on internal challenges around culture, leadership and improved management systems and policy capability through a new chief executive is the preferred way forward at this stage. It contrasts with the circumstances at MYA whose capability risks lie primarily outside its direct control e.g. generating the necessary leverage and influence over other departments to adopt the YDSA.

42 The most immediate need is to appoint a new chief executive with a clear mandate for change, i.e. initiating and reinforcing the capability development under way, building the Ministry's reputation and credibility and working closely with other departments to support and encourage their active participation in policy programmes impacting women.

43 This option best reflects the concerns raised in the Cabinet paper: [CAB Min (03) 8/3A refers] "....while recognising the variety of departmental relationships that the small population Ministries are required to maintain, and the extent to which the results they achieve are dependent on the cooperation and actions of other Ministries." Status as a stand-alone entity maintains a cross-governmental focus while allowing future collaboration on specific work programmes. The Women's Action Plan, with a government mandate, will provide a platform for enhanced cross-governmental relationships to be developed.

44 Internal enhancement is the top priority in the short-term, but virtual administration (back and front office) would be considered as the leadership and management rebuilding gathers momentum.

45 Consideration will be given to appointing a chief executive with these change leadership skills for a term of two to three years with the position description reflecting the priorities and specific objectives. SSC will work closely with the chief executive on the change initiatives and the value of future virtual administration options.

46 The detail of specific change plan will be determined by the chief executive once she/he has been in the position and experienced the organisation and will be done in conjunction with SSC, who will provide advice and support with the findings of the capability review. To specify the detail of initiatives in advance will unduly constrain the innovation of the new chief executive and reduce the attractiveness of this position to suitable applicants.

47 The success of this option would be highly dependent on the ability of the chief executive to drive and lead change. Difficulties in recruiting and retaining the required policy staff will remain in the short term but will be mitigated by an improved internal culture and management and the consideration of a range of recruitment strategies.

Risk Management

48 It is acknowledged there is some risk to this option in relation to attracting and appointing the right Chief Executive who will then lead the change programme including building strong cross governmental relationships. The following are risk mitigation measures:

• The State Services Commission will continue to work closely with the acting Chief executive, including in regard to the implementation of performance improvement changes. Recruitment of a new Chief Executive will commence as soon as possible and will reflect the importance of strong change management, organisational development experience in the position description and subsequent appointment.
• The State Services Commission and the Ministry of Women's Affairs will report back to Ministers on the capability improvements achieved, including the extent of collaboration between government departments, and the value of virtual administration initiatives within twelve months of the appointment of the new chief executive.
• The State Services Commission, and other Central Agencies, will work closely with the new chief executive including communication of the findings of this capability review and the provision of advice and support for priority actions by the new Chief Executive.

Comparison of Recommended Solutions

49 Although these two departments are both "population Ministries", along with Te Puni Kokori and the Ministry of Pacific Island Affairs, their synergies with other departments and respective foci have key differences. MYA sits closely with the social development interests of MSD whereas MWA has an over-arching cross-governmental focus. In addition, the capability issues are significantly different with MYA facing challenges in its external relationships while MWA has a number of internal issues.

Consultation

50 The Treasury, Department of Prime Minister and Cabinet, MSD, MWA, MYA, the NZ Public Service Association (PSA) and the Ministry of Health (in relation to Youth Suicide Prevention) have been consulted on the proposals contained in this paper, and their views have been taken into account. The PSA was involved in the context of Partnership for Quality.

Financial Implications

Ministry of Youth Affairs

51 There is potential for redundancy compensation in respect of the current Chief Executive of MYA but this can be met within existing appropriations. The Chief Executive of MSD will need to integrate the Ministry into his department. Some of these measures will carry costs (relocation; lease; realignment of salaries) which will be absorbed into MSD's base-line. Such changes may mean future redeployment or redundancies for some staff. The chief executive intends to take all steps to minimise redundancies and, where possible, absorb affected corporate staff into MSD corporate positions. Any costs associated with the merger will be met within MSD's existing baselines.

52 Depending on the savings generated, a business case for additional initiatives to strengthen and enhance the integrated MYD may be presented to Ministers in the future for consideration. Any such proposal will be evaluated on the same basis as any other business case.

Ministry of Women's Affairs

53 There will be no additional financial costs at the initiation of the internally focussed initiatives to rebuild MWA. However, once a new chief executive is appointed, she/he may over time identify additional capability enhancing initiatives that may carry costs (or indeed savings), and a business case for funding will be developed. This is a matter for the chief executive to assess and advise Ministers on in due course. Any such proposal will be evaluated on the same basis as any other business case.

Human rights

54 There are no human rights implications as a result of this paper.

Legislative implications

55 The disestablishment of MYA as a separate Public Service department will require its removal from the First Schedule of the State Sector Act, 1988, a change which currently requires legislation. However, if the State Sector Amendment Bill (now at Committee stage) is enacted at least 28 days prior to the identified transfer date of 1 October 2003, the change to the Schedule will be able to be made by an Order in Council.

56 Sections 61A and 61B of the State Sector Act 1988 deal with the transfer of staff from one department to another. Where duties are no longer to be carried out in a department, section 61A provides that the Chief Executive of another department can appoint staff affected to positions in that other department, subject to the employment agreement and following consultation with the staff concerned. Transferred staff are to perform substantially the same duties in the other department on no less favourable terms and conditions of employment (section 61B).

57 The drawback of section 61A is that if technical redundancy clauses in the employment agreements of affected employees are not sufficiently robust, an employee may refuse appointment to a position with substantially similar duties and no less favourable terms and conditions of employment and exercise their right to redundancy compensation. (Under the State Sector Amendment Bill a person offered such a position and terms and conditions of employment would not be eligible for redundancy compensation.)

58 The Collective Agreement for MYA contains a robust technical redundancy clause. No redundancy compensation would be payable to employees offered positions in MSD in the same capacity as they were employed in the MYA (or that they were willing to accept) if the terms and conditions of employment were no less favourable and service was to be treated as continuous. The majority of MYA staff are currently covered by the Collective Agreement.

Regulatory impact and compliance cost statement

59 No regulatory impact statement or business compliance cost statement is required, as this paper deals with administrative and machinery of government matters that do not impact on businesses, consumers or the public.

Gender implications

60 There are no gender implications as a result of this paper.

Publicity

61 It is proposed that the Minister of State Services:

• Announce the merger of MYA into MSD, and co-ordinate supporting comment from the Ministers of Youth Affairs and Social Services and Employment. Matters relating to staff changes and confidence of stakeholders will be addressed in Ministerial and chief executive communications;
• Announce the internal enhancement initiatives at MWA with supporting comment from the Minister of Women's Affairs and other relevant Ministers (e.g. Labour). The possibility of some virtual administration option(s) in the future, to maximise performance improvements, will need to be included in communications. The confidence of stakeholders will need to be addressed in Ministerial and chief executive communications.

Recommendations

62 It is recommended that the Cabinet Policy Committee: