What are the lessons of flawed corporate and institutional cultures for the APS?
April 11, 2019
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The interim report from the Australian Public Service (APS) Review, chaired by David Thodey, examined the capability, culture and operating model of the APS. At the forefront, it highlights the need to strengthen the culture, governance and leadership model as a priority for change.

The recent Royal Commissions into child sexual abuse and misconduct in financial institutions have clinically exposed the contribution of organisational culture to misconduct. Corporate and institutional failure characterised by poor leadership, poor behaviour, and misaligned incentives has led to catastrophic outcomes for many Australians.

In light of this, what lessons might the APS Review take as it seeks to set the conditions for a culture, governance and leadership across the APS?

 

Two Royal Commissions, one shared theme

David Schmidtchen, executive director of people and organisational development at Synergy Group Australia, sees “over-confident leadership was central to the Commission’s findings around poor culture and behaviour.”

From her experience working with organisations responding to the recommendations of the Royal Commission into the Institutional Response to Child Sexual Abuse, Sally Dorsett, who co-leads
people and organisational development at Synergy with Schmidtchen, noted the need to realign institutional leadership and cultural values.

“The Commission’s findings showed that the institutions involved did not have a culture where the interests and protection of children was a priority. In some cases, self-interest, poor practices, poor governance, inaccurate reporting, and gaps in accountability had become part of accepted cultural practice. The impact on children, families and communities of these failures was devastating and long-lasting. We need to remember what happened and not let that happen again,” said Dorsett.

Similarly, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry exposed how over-confident leadership thrives in inward-looking, self-protective cultures.

Importantly, the Banking Royal Commission also highlighted the way business models, governance, work practices, and incentives shaped behaviour.

“We work at the intersection between people, work, and organisation every day. Watching the Banking Royal Commission unfold was excruciating. The testimony of experienced leaders described basic failures in leadership, organisation, and accountability. Worse still, when presented with overwhelming evidence they dissembled and attempted to defend the indefensible,” says Schmidtchen.

Cultural and behavioural failures in the financial sector breached community and government trust, leading to significant reputational damage across the entire sector.

“The APS values and ethical practice provide a strong foundation for APS culture,” says Schmidtchen.

 

The importance of culture

Language and clarity is important in culture. Dorsett recalls when conversations with senior leaders overseeing organisational culture was dismissed as ‘soft’. She puts a strong case for why culture is important.

“Culture underwrites, influences, and shapes everything we do. Our professionalism, integrity, accountability, risk management, attraction and retention, individual behaviour, how teams work together, and everything in between are shaped by culture,” said Dorsett.

Dorsett believes leaders who invest most of their time on policy, process, and procedure can only take organisational performance so far. The real capability uplift comes from the commitment and engagement of people working together.

“The difference between elite sporting teams is not technical, it is cultural. Why would it be any different in our organisations?”

 

Learning the lessons: what has been left unsaid?

Schmidtchen and Dorsett are concerned we are missing something important if we only pay attention to the shocking and obvious headlines about cultural failures. They are concerned about the thinking and conversations around organisational culture, neither of which are evolving.

“We think that running beneath all the findings across both Commissions are three factors that have shaped the culture of the firms and institutions involved, and all three are present in the APS. The post-Commission commentary is not challenging what needs to change. We are at risk of reaching into the tool bag and pulling out the same old tools and practices that have so devastatingly failed customers and the community. We need to think differently. We need to respond differently,” says Schmidtchen

Schmidtchen and Dorsett believes that organisational complexity, an unhealthy focus on quick wins at the expense of strategy, and fundamental changes in the way work is done are the subterranean themes of corporate and institutional cultural failure.

“Complexity, change, and work design are often seen as technical issues by leaders when in practice they shape organisational behaviour and culture,” said Schmidtchen.

The three lessons for the APS Review that emerge from thinking broadly about the failures of the firms in the financial sector are:

 

Simplify structures, decision-making process, the ways of work.

Schmidtchen sees that complexity is diluting accountability and responsibility. Behaviourally, complexity breeds apathy and inculcates compliance. Culturally, complexity leads to an inability to clearly express our purpose to ourselves or others.

Knowing who you are, what you stand for, and how you contribute is critical to culture and performance.

 

Leadership has become technically focused.

Leaders are being driven to search for tools to help them solve immediate problems. The management fads that feed the desire for quick wins play a role here.

“Quick wins are satisfying in the short term but often hollow in the long term. There are no shortcuts in getting culture and behaviour right,” said Schmidtchen.

 

The way we design work has a direct impact on behaviour and culture.

The Banking Royal Commission was instructive on the role incentives play in shaping culture and behaviour. Dorsett uses the example of flexible work.

“Have we designed work in a way that enables flexibility? Not really. So, in practice we just add more tension into the relationship between managers and employees as they work around inadequate work design. In turn, this shapes the culture and behaviour of everybody involved. Sometimes, the unintended consequence of this is higher rates of unscheduled absence.”

What next?

Schmidtchen and Dorsett are both upbeat about the potential of the APS Review to set the conditions for reform across the APS, but they are realistic about the challenges of change in an institution that has a deep and rich cultural history.

“We have worked with some tremendous people across the APS. They believe in what they do and care deeply about making a positive difference. Unfortunately, we also see workplace cultures, leadership behaviours, and poorly designed work that eats away at that commitment,” said Dorsett.

She added, “Culture is the difference between average performance and high performance. We need to work together to find ways to free up the workforce to make the contribution they believe in.”

Schmidtchen also noted the importance of everyday consistency in realising meaningful change.

“Culture is not about exquisitely crafted values and purpose statements, it is about how you behave. How we lead and manage change, the way we design work, and how we treat people has by far a greater impact on culture as it is experienced in the workplace, by customers, and the community.”

Dorsett and Schmidtchen work on the problems of people, work and organisation as a partnership with each bringing a different experience and insight. They approach their work with curiosity, an open mind, and imagination.

They believe these same characteristics will help the APS Review to learn the lessons of recent failures in corporate and institutional cultures, and create the conditions for positive reform.