To this Letters Main Page

To this Letters Features

To the Index







    The Hunn Report
    Our essential summary of the issues raised in the Ministerial Inquiry into the Department of Work and Income (DWI)

    from The Jobs Letter No.124 / 19 May 2000

    "It has met the organisational goals for the initial period but the principal employment policy objectives, the raison d'etre for Winz's existence, remain elusive"
    The Hunn Report

    "The complexity of the benefit system is such that staff estimate it takes up to two years to understand all its permutations. Taking into account the staff turnover rates of 13% overall it is evident that at any one time a substantial proportion of staff are not fully trained and require continual support."
    The Hunn Report

    On the face of it we are confronted with a paradox. On the one hand the organisation has achieved a great deal in a relatively short time, given the size of the task and the period of years normally required for a major restructuring of this kind to succeed. In broad terms these achievements were acknowledged by the previous Government which was responsible for the concept of the department, the policies on which it was based and the implementation framework during its first twelve months of existence. DWI has fulfilled its organisation integration goals before time and within budget, it has put together the largest government department in the country with extraordinarily difficult tasks to perform, it has introduced significant new policies and accepted additions to its responsibilities and it has done all this while covering the Government's main risk, namely the possible failure of the benefit system.

  • On the other hand, the organisation finds itself the object of severe criticism and ridicule around the country. In twelve months it has managed to alienate the public, parliamentarians, colleagues, clients and their advocates, tertiary students and university administrators, the media and members of its own staff. It is not surprising that Ministers have concerns as to the department's ability to implement their decisions. The cost of success has been very high indeed.

    The welfare sector and its administration are at the heart of politics in this country. Nothing and no-one can escape criticism. While media attention has not been as unrelenting as it has been over the past year, welfare departments have always had to work within a highly politicized environment which generates constant criticism. From a media perspective, also, individual hardships (often arising from a few mistakes among hundreds of thousands of routine successes) generate human interest stories which support the journalists' central theme that inherently bureaucrats are bunglers. The special feature in the case of DWI was that the structural solution was a political solution. The department was not set up, as most are, to provide people and processes to implement whatever policies are directed to it: in this instance the department was the policy. It was natural, therefore, that it attracted political attention from the beginning being seen as the instrument of a particular point of view which was not accepted by many. Consequently any failure has been drawn on as evidence that DWI is flawed — in the eyes of some, fatally.

  • The department has not helped itself by continually adding to this volatile mixture, or, rather, by appearing not to be able to avoid mistakes. It can claim that a number of its errors were no worse and, in some cases, not as bad as those in other public sector organisations. But it cannot overcome the poor impression created by what seems to the public to be a series of mishaps. Perceptions have been formed from a regular diet of stories: office fit-outs; the sale of personal information; the disastrous Wairakei affair; corporate activities such as mock weddings at managers' meetings; the pay-offs and resignations of staff; the problems first with student allowances and then, despite assurances to Parliament, with student loans. All of these, with the inexorability of Gresham's Law, have overshadowed the achievements and undermined the department's public credibility. It is to be hoped that the department has learned from this that it does not matter whether others have sinned more than it has or that others must share the responsibility for some of these things, it is inescapable that it is working in an environment where a reputation either for waste and extravagance or for systems failure will create so many difficulties and divert so much management attention that it will not be able to do its job properly. As much as anything the contrast between what is perceived to be carelessness with the taxpayers' money and the distressed circumstances of many of the department's clients, has raised doubts over appropriateness and thus of competence, which will take some time for DWI to dispel.

    DWI was unique in other ways also. It was the first institutional expression of coalition politics — the personal "dream" of a senior member of one of the coalition partners which was redesigned to fit with the agenda of the other partner (and in that respect was seen as part of a continuum over a decade and a half of a progressive solution to the country's welfare and unemployment problems). It was part of the last major public sector reform in the social area which had, from the outset, been much more difficult to bring off than the economic reforms — and by the time it took place the electorate's taste for reform had dissolved. The unique quality of the experiment was intensified by the fact that it was an attempt at merger, whereas most of the change management experience had been learned in situations of down-sizing and the transfer of departments outside the Public Service. Organisationally DWI was unusual in that its focus was on reducing unemployment while the bulk of its work derived from managing the benefit system; it was set up as a single purpose service delivery agency without some of the functions normally associated with a Government department; it was subject to a dual monitoring regime in addition to the usual performance management and accountability structure — and differences of opinion on all three of these matters persist to the present day.

    The original concept for amalgamating income support and employment services had been developed when Government functions related to unemployment were separately identifiable. By the time of DWI's establishment the unemployment benefit had been integrated within the welfare delivery system as a whole and Cabinet had agreed that the client base for the employment strategy should be broadened to cover all working age beneficiaries. The result was that rather than attempting to disassemble the complex network of income support it was thought preferable to keep it all together in the one organisation. The practical effect of this was to render virtually unattainable any possibility of merger. One part of the new agency, with its own distinct culture and client orientation, was three times the size of the second largest component whose culture and orientation were quite different — the one internally focussed, the other externally; the one process driven, the other relationship driven; the one stressing uniformity and consistency, the other more free-wheeling and diverse. In the event it was not surprising that the larger took over the smaller; that the senior management team reflected one stream rather than the other; that the business process dominated the relationship one; that the service delivery corporate culture which had been evolving within Income Support and Employment Service over the previous decade became accentuated; and that centralisation and strong direction were the levers required to impose unity.

    There are other examples of the influence of the corporate culture. For the purposes of this discussion of the nature of the problem perhaps the most important is the "can do" style which typifies DWI's approach to problem solution. The upside of it is the drive to achieve and to overcome major obstacles. It took well-developed organisational skills and highly focused managers to put in place the full structural integration model and to implement work first and the community wage within DWI's first 18 months. The reverse side is the danger of over confidence, as would seem to have been partly the reason for the student allowances/student loans episodes, and the danger that staff will be put under such pressure that demotivation will lead to an inability to cope. "Can do" has also left the impression with others that DWI is insufficiently analytical when it is faced with problems and that it tends to say "just leave it with us and we'll get it done our way". Unfortunately, in the light of the matters already mentioned along with others such as the use of consultants, "our way" has become identified with the notion that "if you throw enough money at it, you'll solve it".

  • The corporate approach tends to emphasise the importance of the single organisation as it strives to compete in an unforgiving world. It stresses difference, taking charge of one's own destiny, a unique mission, vision and strategy — all of which are aimed at the bottom-line. There is less emphasis on collegiality, the collective interest and a shared set of values across many organisations, which are essential to the running of the Public Service.

  • In our view this has its genesis in the origins as well as the experience of senior managers — again an observation which DWI disputes. There is no doubt the senior management group can demonstrate considerable Public Service experience, including working with Ministers, but the majority of them came from the Income Support Service where they were not part of the policy making or government relations functions. This is not a criticism; it is simply the product of a particular career development path. Certainly, it is an issue which is apparent to DWI's colleagues in other departments. In our discussions with departmental chief executives they felt DWI had failed to recognise the need for external consultation, seeking advice from senior colleagues and building useful relationships with those who had had long experience in the political/constitutional/legal environment. Even sharper were their comments on the effect of DWI's mistakes. While acknowledging that in most cases they were not aware of all of the background and that the media were giving the issues a very high profile, chief executives were perturbed about the behaviour that appeared to give rise to the political and public criticism. There was real concern that this was reflecting very badly on the Public Service in general and that the management, credibility and political and public faith in the integrity of the Public Service was being badly damaged. It was felt that the "corporate style" was not appropriate in public sector management. This style was not seen as a necessary prerequisite to good programme delivery.

    Currently consideration is being given to going back, albeit within the one organisation, to the separation of income support and employment services. The majority of staff would prefer separation along the lines of work-tested and non work-tested clients. Whichever of these alternatives is preferred the problem of overload has to be solved. Further siphoning off the front end of the client base and reserving case management to be used in the most cost effective manner could be one way of doing it. Tied with greater specialisation and more flexible locally based work processes, the burden on case managers could be lifted while the difficulties over benefit entitlements and special needs grants could be relieved.

    The effect on management and staff has been profound. The constant criticism, the strength of what are often personal attacks, the perception that DWI lacks support "from the system" and the continuous reviews have had a demoralising effect and strengthened the inward focus which was implicit in the corporate business model. It was clearly understood from the beginning that it would take at least four years for an organisation of this size and complexity to shake down into the seamless operation that was planned. The unfavourable publicity that has been the accompaniment of the past twelve months has complicated the transition phase. In order to assist the organisation to emerge from this difficult period and to move forward, it will be essential to listen carefully to what the staff and field managers have to say about their experience at the coal face.

  • As it has moved around the country the review team has been impressed with the quality of the staff and their dedication to the success of the department's policy objectives. Despite both the public battering they have had to endure and their current uncertainty as to what is now expected of them, there appears to be a general consensus (with some significant exceptions) that the "one stop shop", the range of interventions available to them and the case management approach and the close working relationship between case managers and work brokers have produced an environment which they claim has increased substantially their ability to achieve the objective of reducing the percentage of long term unemployed. The enthusiasm of staff who have been able to exploit the new opportunities and resolve difficult cases (some clients who have been out of work for up to 10 years are now back in stable employment) is in marked contrast to other staff who are weighed down by the case loads or by the immediacy of meeting pressing needs for benefit assistance and are unable to apply the "work first" philosophy.

  • To a degree the "one stop shop" has become a "one stop person" in the sense that clients (other than superannuitants, invalid beneficiaries and those on special programmes like Compass) tend to be directed to a single case manager when greater specialisation and a team or cluster-based approach, together with other processes for groups with special requirements, might be more cost effective — and indeed this is already happening in some centres.

  • There is a call for much greater flexibility at regional and service centre levels so that local solutions can be tailored to local circumstances. The "one stop shop" should not be based on "one size fits all". For its part, DWI accepts the time is opportune to consider greater flexibility but would prefer to see it expressed within the service delivery model rather than as a series of separate processes.

  • "Multi-skilling", on which case management is currently founded is seen as an ideal but one which is difficult to attain. The complexity of the benefit system is such that staff estimate it takes up to two years to understand all its permutations. Taking into account the staff turnover rates of 13% overall it is evident that at any one time a substantial proportion of staff are not fully trained and require continual support. These turnover rates are not out of the way — the overall rate is in line with the Public Service average. But the implications of basing a substantial part of the operational model on multi-skilling need to be reconsidered.

  • The department's key performance indicators (KPIs) generate considerable feeling, amongst staff, purchase and monitoring agencies through to beneficiary advocacy groups. DWI uses the indicators to focus staff attention on achieving Government's outcomes and to assist in individual, centre, regional and organisational performance management. KPIs also play a part in determining performance bonuses.

    Staff have expressed concern about the strong focus on KPIs in their day to day working lives. There is a view that KPIs do not necessarily reflect the entirety of their workload and that individualising some performance measures makes staff responsible for achieving outcomes outside of their control. At the same time, staff do not deny the need for some form of personal performance measures or for site/regional performance targets.

    At present organisational KPIs are not published externally. Publishing KPIs would eliminate misconceptions held in the community about rewards given for not granting beneficiaries their full entitlements. This is unfair to staff, who are measured on benefit accuracy and turnaround, amongst others, and are not encouraged by performance indicators, or any other means, to deny people their proper assistance.

    A variety of views on culture and style emerged from the focus groups. Many staff supported the efforts the Chief Executive made to keep in touch with staff through visits and communication. Views were mixed on brand, offices, corporate wardrobe and terminology — while some expressed very strong views, others did not discuss them, did not see them as an issue or supported them.

  • A major theme running through many staff submissions was request for recognition of diversity of thought and honest feedback. The department is not seen by some staff to be a safe place to offer up constructive criticism.

    The significance of unemployment among Maori and its effect on Maori aspirations and development has been an issue for policy makers for many years. It has been re-emphasized recently in Te Puni Kokiri's publication "Closing the Gap". The sad truth is that as a nation we are making little progress in solving the problem. The proportion of Maori unemployed is twice that of the Maori population ratio (and very much higher than that in some regions). The proportion of Maori among the target group of long term unemployment is even higher. Viewed from this perspective, it would suggest that service to the Maori community should be DWI's prime focus. This, in turn, should be a major influence on the strategies, priorities and activities of the organisation and one of the determining factors of its modus operandi. The evidence produced to this review indicates that DWI has a long way to go in achieving the government's goals in this area and indeed, in some respects, the way in which the organisation has developed is at odds with the objective.

    The ITT plan proposed "a regional and national partnership which recognizes the special place of Maori as Tangata Whenua in developing regional and national responses to address the barriers to self-sufficiency experienced by Maori". This was a promising opening but it was far as it went: there was no strategy to turn the goal into reality.

  • DWI appears to be aware of the distance it has yet to travel. The Ministerial Briefing Paper of December 1999 concedes that the significant income support and employment representation disparities in the Maori community "in large measure have been resistant to current interventions." The most recent (April 2000) DWI monthly overview of service delivery performance refers to the purchase agreement objective to reduce the volume of registered Maori unemployed to 28.5% by 30 June 2000 and says this "is proving to be a significant challenge". The same publication shows that the figures for customer development activity (training) and job placement are ahead of target, but the key figure for stable employment persists below target — and if anything the gap between the target and performance is increasing (at a time when the Statistics Department Household Labour Force Survey shows a drop in Maori unemployment).

    While it is probably too soon to reach any firm conclusion, the question has to be asked whether DWI's current directions are likely to be any more successful than its predecessors.

    In DWI's case the ambitious nature of the experiment in attempting to bring together such disparate streams of activity has been complicated by the problems the organisation itself has created. Some of the mistakes were the inevitable accompaniment of trying to do too much too soon. Others have demonstrated lack of judgement and experience. For their part the public and political leaders have made it very clear that certain behaviours are unacceptable and DWI has gone some way to meet the criticism. More will be needed to restore public confidence. Whatever else remains to be done to achieve this, the time has come to look beyond the personal issues and to focus on the big picture. DWI has an essential role to play in a sector which is fundamental to the well-being of our society. All of us as citizens have an interest in the success of the organisation charged with such important responsibilities.

    Source Ministerial Review into the Department of Work and Income, Don Hunn Wellington 8 May 2000;

    To the Top
    Top of Page
    This Letter's Main Page
    Stats | Subscribe | Index |
    The Jobs Letter Home Page | The Website Home Page
    The Jobs Research Trust -- a not-for-profit Charitable Trust
    constituted in 1994
    We publish The Jobs Letter