Mixed response to State management audit

Press, 1 September 1977, Page 16

Mixed response to State management audit

When reviewing the work of other Government departments, the State Services Commission cannot avoid disturbing some public servants. The commission’s internal audit of the Tourist and Publicity Department recently caused concern in the department. Oliver Riddell of “The Press” Wellington office continues his occasional series of articles on the workings of the State Services Commission and the Public Service.

In the 15 months since the establishment of the Management Audit Unit by the State Services Commission, to review the efficiency of departments, five audits have been completed — Trade and Industry, Tourist and Pubilicity, National Library, Statistics, and Housing Corporation (Auckland branch) — and a great deal more is known about the techniques involved. Small departments were chosen for the first audits so audit teams would not be over-awed by their task. Much has been learned which should be nf benefit in future audits. The first lesson — from Trade and Industry — was not to make vague recommendations. This audit made 48 specific recommendations. which ranged from "that the head of Department insist that his senior managers ’meet their responsibilities to manage, as distinct from carrying out the general work tasks,” to “that each assistant head of department have a secretarytynist.” This is as might be expected. Audits are expected to range over all aspects of management, and investigate matters from the number of electric typewriters in the department to the managerial competence of the department’s head. But it is people as managers, and not things, an audit looks at.

The Trade and Industry audit was “effective” partly because the department had already been working on a plan for its own reconstruction, for which it would have needed the commission’s approval, and the audit’s recommendations followed the department’s plan in many respects. The department wanted the audit, it put two able, middlemanagement men into the audit team, and was satisfied that its own representatives gave the audit greater worth. They were able to identify problems that would not have been obvious to outsiders, and were able to assist in devising solutions. It was for just these reasons that the commission wanted departmental representatives in the audit team. Also, their presence gave authority to the audit within the department and made staff cooperation more likely. This enabled quick action on the audit’s recommendations so its imnetus was not lost and its value not diminished. But the audit also contained a general pre-amble which made a number of vague, but sometimes critical comments about the department. This pre-amble’s comments were objectionable to Trade and Industry, not only becase they were critical, but because thev were vague and

their comments were not sustained in the body of the audit or its recommendations. The existence of this vague and general pre-amble could have proved a barrier to the audit’s acceptance within the department, but it was not allowed to. The commission and the department jointly agreed that the pre-amble should form no part of the audit and should be destroyed, which is was. This was possible because the audit’s findings and recommendations have no binding power of their own; they are only recommendations to the departmental head and the commission’s chairman. Following this audit, the Trade and Industry Department has established its own internal mechanism for implementing the recommendations, and to ensure that management audit becomes a continuous process — in line with a minute from the Cabinet in mid-1976 that such an internal audit mechanism should exist in every department. Next came the Tourist and Publicity Department. A joint audit team of commission and departmental officers made 127 recommendations on management efficiency, of which 108 were accepted wholly or in part by the department. Discussion continues on the others. There were some complaints from within the department that the team was too sympathetic to those wanting change and did not listen sufficiently to managers who explained why various proposals were impractical. There was also criticism that the audit team did not consult sufficiently often during the audit, and thus some of the recommendations came as a bolt from the blue. Both comments seem to

have had some validity, and continual communication throughout an audit is something that audit teams must ensure if the result is to be “effective” within any department, and satisfactory implementation of the recommendations is to follow. But, by and large, the audit was a success and in no way upset the normal working relationship between the department and the commission. Where the audit team and the department did part company was over two “machinery of government” recommendations (recommendations on the allocation of functions between departments) that preceded the 127 management audit recommendations. , Machinery of government reviews are the first function given to the commission under Section 12 of the State Services Act. 1962, which includes — “the allocation of functions to and between departments. the desirability or need for the creation of new departments, the amalgamation or abolition of existing departments. the coordination of activities of departments, and the extent and nature of controls exercised by any one department over the operations of another department.” It is current thinking within the commission that machinery of government recommendations are a possible, or even a likely outcome of an audit, but this seems not to have been made clear to the Tourist and Publicity Department. So the department, which thought it was participating in a management audit, found important questions concerning its future as a department at issue. If the two suggested possibilities were carried out. a very

different and much smaller department would be the result. (The Tourist and Publicity Department is set up under its 1963 Act with five functions — the chief of which are to encourage and develop the tourist industry and tourist traffic to, within, and beyond New Zealand; establish. maintain and operate a travel service for reward; and establish, maintain, develop and operate publicity, information and public relations services, which includes the National Film Unit.) Further, in Section 64 (a) (i) of the Public Service Regulations, 1964, the permanent head of any department has a clear duty to — “review the nature and essentuality of the policies, function and procedures of the department, and report to his Minister (with a copy to the commission) on any needed changes in functions, policies or major procedures, or in the allocation of major functions between divisions of his department, or between his department and another.” But, in fact, these recommendations only suggest studies to look at some of these activities, and certainly do not recommend that they be acted upon. They do not recommend machinery of government changes, as per Section 12 of the State Services Act, and would have had no power to bind either the department or the commission if they had. Still, even if Tourist and Publicity over-reacted to them, the recommendations should have been handled more diplomatically by the audit team. The recommendations must have some impact on the “effectiveness” of the audit, and thus the purpose

of the audit has been retarded rather than advanced. "Effectiveness" is the prime goal of an audit, so the audit has this black mark against More sensitivity is needed when audit teams work in departments to distinguish between what are purely machinery matters and those matters which effect the interests of the people working there. Too much emphasis has been laid on what ’.s wrong in departments and what needs to be improved, and too little attention to praising the good aspects Also. any machinery of government matter which mav require further study should be an appendix to the main audit, and not a preface to it. Putting machinery of government recommendations first makes them seem more important than the audit. .... , . The susceptibilities of departments are likely to be handled more gently in future audits as a result of experience with the Tourist and Publicity Department. Already there are signs that a gentler approach was adopted in the recentlycompleted management audit of the Statistics Department. But the odd teething troubles encountered by the Management Audit Unit as it improves its operational technique should not be allowed to obscure the large benefits the departments stand to derive from being audited. both in their efficiency and their economy, by teams on which they are represented. For the first time. New Zealand’s Public Service has a tool with which to measure effectively its efficiency and economy, and then be seen by the taxpayers and the Government to improve them.