Section Five: Organisational Development Strategy

This Document is Archived

Ministry of Economic Development: Our Vision

• Larger, printable version of "Our Vision" [704 kB GIF file]
• Text description of "Our Vision"

Organisational Development Strategy

Achievement of the Ministry's vision drives our organisational development strategy. Our commitment to leadership, building a well connected and integrated organisation, and developing talented and committed people are crucial to achieving our strategic priorities and business outcomes.

We have taken into account the State Sector Development Goals and our part in building a system of world-class professional state services serving the government of the day and meeting the needs of New Zealanders. We will commit resources and managerial effort to develop our people, process and system capabilities to achieve these goals in the short and medium term.

Leadership: Engaging to Strengthen Our Leadership Role

With regard to the economic development agenda, we seek to lead in partnership with the key economic players to achieve our strategic priorities. We will participate in these partnerships in a manner that will help us to identify the focus for government to make a real difference to New Zealand's economic performance.

We work with and influence other agencies by articulating the Government's economic transformation agenda and its implications for both ourselves and them. We have responsibility for leading the whole-of-government effort for economic transformation and we will continue to deepen our capability to influence and assist other agencies to align their work with this agenda. This role supports our contribution to the State Services Development Goal of Coordinated state agencies to ensure that the total contribution of government agencies is greater than the sum of its parts.

Working in partnership with others requires us to be good listeners, responsive to the needs of business, local communities and local government. We must be able to build and maintain effective ongoing working relationships where both parties value and understand the significance of the connections. We need to have a clear, shared understanding of the outcomes we are working towards, so we can confidently and clearly articulate them to others.

Our understanding of the strategic issues underpinning our decision-making and advice to government will be informed from the dialogue we have with a range of stakeholders. We will continue to test our understanding of the drivers of economic development. This testing comes through our dialogue with Ministers and other informative activity such as research and evaluation. To take leadership of the Government's economic transformation agenda requires our managers and staff to be articulate and influential with others, both internally and in the wider community. Training and support will assist them to be effective in this role.

Key Action Points

We will:

• Embed the structural and system changes within the Ministry that were initiated in late 2006 to ensure that we have the skills and expertise dedicated to effecting strong leadership of the economic transformation agenda and the appropriate focus on our key relationships. Core to this will be ensuring the new branch structure improves our capacity to work across the Ministry, and that relationships with Crown Entities are effectively managed.
• Continue dialogue with stakeholders on the economic transformation agenda. Our people need to be well networked and able to interact confidently with external audiences, including state agencies, business and local government about what matters for economic development. In addition to our day-to-day and informal dealings with stakeholders, this dialogue will be augmented through a targeted programme of briefings, speeches and selected conference attendance. We will develop information packages, presentations and tools (such as our online newsletter Business Update) to assist staff with this task. To improve the quality of this engagement, we will implement the learnings from our external stakeholder survey.
• Grow our understanding of business and the economic challenges New Zealand faces, through initiatives such as industry visits, secondments and regular engagement with business. The strategic leadership team will continue to support the Industry Insite programme and other forms of business engagement involving spending time with business and business-related organisations. This enables our senior managers to understand economic development issues from a business perspective, and to hear first-hand how government agencies can best interact with business.
• Increase investment in strategic thinking capability across the Ministry. This primarily involves ensuring that reflective thinking is valued and practised widely as part of our work, enabling us to improve our understanding of key issues and to create practical solutions to critical economic development issues. We will use a variety of mechanisms to enhance our capability including appointments to chief advisor roles, maintaining a working paper series, aligning performance expectations to value knowledge sharing, creating linkages with external groups that deepen our understanding of the significant economic development issues and effectively utilising the knowledge and skills in the Economic Strategy Branch. The focus of this work will be to ensure that we have a richer understanding of what will achieve sustainable growth and what role government activity plays in this.

Working Together: Connected and Focused on Priorities

Our vision is to harness our combined expertise as an integrated organisation. We also are committed to analysis and open debate and to adding value to others' work. We constantly strive to do things better and add value to the work of others so that we can deliver innovative, practical solutions to improve the business environment. We seek to contribute to the State Services Development Goal of Excellent state servants by developing a strong culture of constant learning in the pursuit of excellence.

The Ministry works across nine portfolios to deliver on the Government's economic transformation agenda. To be effective we need to ensure all parts of our organisation work together to a common purpose. We will continue to align our internal structures, systems and processes with our strategic priorities and business outcomes. This alignment will mean that we are able to identify our priorities, focus on those projects and activities that are vital and quickly redeploy resources to ensure their achievement. It also means that we develop the managerial skills and tools to mobilise resources and deliver innovative and practical solutions. To support this, we will continue to foster an environment of knowledge sharing.

Key Action Points

We will:

• Focus on improving opportunities for enhancing the way we utilise the skills of our people and deploy our resources. After identifying the key areas of focus through our planning and review processes, we will increase the use of cross-Ministry project teams to work intensively on key issues to completion. While this is a current practice in the Ministry, we will be looking at how we improve the use of teams and technologies to ensure that we connect resources from both across the organisation and other agencies where appropriate. We will endeavour to use this way of working to produce a more serial and systematic engagement on key issues.
• Refine our approach to strategy, planning and review systems to allow informed management choices around short- and long-term priorities. This work focuses both on the formulation and execution of strategy. We remain committed to enhancing and streamlining our strategy and planning processes, so we can both prioritise and effectively manage risk. We will further develop our review and assurance processes to ensure we have a sharp managerial focus and are progressing vital projects and processes in an innovative and prudent manner. Finally, we will continue to undertake new and varied ways of communicating our strategy internally and will monitor levels of staff understanding.
• Further develop a knowledge-sharing culture and supporting systems, so we can promote internal knowledge-sharing, co-operative learning and effective production of outputs. Integrating knowledge across the Ministry's various work units and votes will support better integration of advice to Ministers, ensuring a consistent focus on the Government's economic transformation agenda. Our knowledge-sharing programme will focus on developing better people networks, more effective conversations and improved information management tools and systems. This programme of work will be designed to foster a culture that values developing, transferring and retaining knowledge.

Talented and Committed People: Developing Our Skills and Expertise

Our vision is to be an employer of choice for talented and committed people. We aim to maintain a culture of excellence, personal development, enthusiasm and mutual support that attracts and retains talented and enthusiastic people. We wish to have a depth of talented people who we can deploy into projects and who can perform at a high level on several projects at once. At the same time, we will look to tailor people's careers to both play to their strengths and build our collective strength.

The Ministry aims to recruit, retain and develop talented people with skills in economics, law, policy analysis, commerce, research, corporate support, economic development and other relevant disciplines. We seek to build an organisation of experienced and capable individuals who understand economic development and the role government and business play in growing our economy, and who have the interpersonal skills to effectively work with others. We need to be attractive to new staff and able to develop the talents of our current staff. This focus will support our commitment to the Employer of choice development goal for the state service.

To make the most of our existing skills base, we will increasingly offer targeted development opportunities to enrich the individual in their role and assist us to deliver on our strategy and outcomes. Our approach to organising and managing work needs to allow staff to build and utilise a portfolio of skills and experiences for the mutual benefit of themselves and the Ministry. In addition to professional development, we offer targeted management development programmes to equip managers with the skills needed to build the capability and work experiences of our staff.

Key Action Points

We will:

• Continue to develop our managerial leadership skills with a focus on developing individual managers' ability to lead and influence others. We will achieve this by more clearly articulating the role of the Ministry of Economic Development manager, providing assessment tools, focusing on training, and building our managers' interpersonal and feedback skills. We will continue refining the development and application of our performance management and development systems.
• Identify, develop and support the pool of staff we can deploy across the Ministry onto key projects. Alongside this initiative, we will continue to refine the processes we use to target the development of staff in role to grow and maintain current and future required functional and interpersonal capabilities.
• Offer specialised targeted development for staff in their roles, relevant to their work responsibilities, which increases their skills and ability to produce effective outcomes for the Ministry and motivates them to continue to invest their knowledge and experience with us. We will seek clearer statements of our development requirements from our planning processes, provide increased support from our human resource professionals to managers to assist employee development planning and provide a clearer framework for utilising whole-of-organisation training initiatives and measuring the impact of our learning and development activity.
• Focus on investing in and improving the IT systems that support our people to lift the organisation's performance.

Measuring Our Progress

Across each of these areas of activity, we will monitor our progress towards realising the desired shift in organisational performance and culture. We collect and produce a range of quantitative and qualitative information to ensure that we have the management data available to measure our performance over time and to focus management time and effort on high priority areas. Included in this dataset is external stakeholder feedback, ministerial feedback, client surveys, staff feedback, critical HR and finance data, and output and project plan reports. Our review systems provide the systems by which managers assess our current performance and allocate resources for the future. We will be spending time in 2007/2008 on further enhancements to the performance and assurance system, including allocating dedicated resources to work on this system and developing and monitoring critical performance indices.

Risks to Achieving the Ministry's Outcomes

Why Assess Risk?

The Ministry has a wide spread of activities. One of our ongoing challenges is to identify and prioritise the critical things that the Ministry can do that will make the biggest contribution to improving growth in New Zealand.

While needing to be constantly aware of the bigger picture, we need to focus on the areas where we have expertise and that relate to our core purpose and outcomes. This requires rigorous priority setting and a well-developed understanding of economic development processes and strategies to ensure that the Ministry maintains the capability to deliver.

The Ministry's risk framework does not require it to be risk averse and acknowledges that, even with sound processes in place, risk events still occur. What it does require is for managers and staff to demonstrate that they have taken a systematic and credible approach to ensure that, given the current knowledge and available resources, the Ministry has taken all reasonable steps to properly manage its risks.

Effective planning, prioritisation and rigorous operating review are all core parts of the Ministry's approach to managing risk. Risk management is an integral part of the Ministry's planning and review systems. It also allows us to have the ability to anticipate and innovatively respond to change. As goals and objectives are identified, so too are the risks to achieving them and the most effective treatment of these risks. Accordingly, work continues to ensure that planning processes incorporate risk profiling and the Ministry's structure and systems promote risk management at all levels.

The Ministry's Risk Framework

The Ministry uses the Australia/New Zealand Risk Management Standard as the basis for our risk management framework, which enables risks to be identified, analysed and managed. The risk management framework applies to strategic and operational initiatives and projects.

The Ministry will further link the risk management framework into the strategic planning process for 2007/2008. This will allow us to better identify organisational risks and develop appropriate mitigation strategies.

The Ministry manages risks to our operations through the use of various governance committees and its Strategic Leadership Team. For example, governance reports prepared for the Risk and Assurance Committee, and the Information Technology Governance Committee will ensure that:

• all key projects are subject to risk management methodology to minimise the risk exposure of the Ministry. For example, the Information Technology Governance Committee requires key IT projects to deliver project quality reviews to ensure compliance with internal and external standards;
• strategic, business, investment, organisational, project and environmental risks are assessed in the risk management process; and
• the overall risk management strategy is monitored and assessed by the Risk and Assurance Committee to ensure that the process is effective.

As part of our strategic and business planning process, we have identified risks to achieving our outcomes and developed specific risk management strategies. As part of the Strategic Leadership Team's operating review processes, the Ministry will monitor risk at both a strategic and operational level. Within this context, the Ministry is constantly seeking to anticipate issues, looking to avert them or mitigating their effects as they arise.

From a strategic level, these risks are identified and managed through excellence in analysis and research of the international literature on what drives productivity improvement, as well as more domestically focused research and information on the main issues and challenges facing the New Zealand economy.

At an operational level, the Ministry identifies and manages risk through project planning, operating review, and review of projects, audits and risk profiling.

The identification and management of risks is an iterative process. While the Ministry has implemented a process of quarterly reviews, the majority of the Ministry's risks are managed through strong management systems, for example, knowledge-sharing, performance management and operating reviews. These systems build on the strategy and planning frameworks and provide a basis for refining strategic priorities and business plan activities at all business levels. It ensures alignment with strategic priorities and cascades these down to business plan level, so that well informed decisions can be made. They also are part of our organisation learning system, enabling people to build their knowledge and experience. These systems focus on providing managers and staff with tools to better identify and manage their risks on an ongoing basis.

The way in which the branch risk profiles inform the Ministry-wide risk profile, and therefore the strategic debate, is illustrated in the diagram overleaf.

There are a number of different types of risk that the Ministry faces, and each requires a different treatment. For example, the following risks could threaten the achievement of the Ministry's strategic objectives:

• Lack of clarity on the roles and responsibilities of the Ministry and the Crown entities that we work closely with in the delivery of the Government's economic development and regulatory regimes;
• Risk of inappropriate advice in areas that could lead to systemic failure;
• Shortage of capability in the employment market to meet the needs of the Ministry.

As noted above, the strategic and business planning processes continue to be strengthened to address these risks by improved direction-setting, accountabilities, capability-building, knowledge management strategies across the organisation, debrief and review, risk management and communication.

Ministry-Wide Risk Profile

• Larger, printable version of "Ministry-Wide Risk Profile" [115 kB GIF file]
• Text description of "Ministry-Wide Risk Profile"

Operationally, the Ministry must also manage significant risk potential - risks arising from our internal management systems, risks with our external systems including failure of technology (for example, delivery of online business registry services), individuals acting in a fraudulent or criminal manner, lack of probity of individuals in meeting their responsibilities as public servants, and failure to prepare for instances outside of the control of the Ministry (for example, natural and man-made disasters).

The Ministry manages these risks through analysis of both user need and system risks, quality management principles, clear communication, effective leadership, business continuity planning and control over suppliers.

The Ministry will continue to refine its strategies to ensure we can provide efficient and effective services to Ministers and third party fee-payers, within the resources available to us. To achieve this, the Ministry will continue to develop:

• effective corporate support that balances services for the Ministry with the corporate governance role to the Chief Executive;
• support structures that deliver efficiently and effectively;
• leadership capability, people and management systems; and
• efficient decision-making and effective identification of financial implications and capital expenditure.

Over the next three years, through the organisational development strategy, the Ministry will build its policy and leadership capability; improve alignment in our strategy, planning and review systems; and improve the Ministry's connectedness and capability to influence across New Zealand.

Environmental Performance

To ensure that we are effectively managing our environmental impact, we are focusing on our:

• emissions management;
• waste management; and
• procurement practices.

This Ministry is one of six public service departments taking the lead on achieving carbon neutrality. In 2007/2008, we will work to develop and implement plans to measure, reduce and offset our carbon emissions. Over the coming months, we will work to take actions consistent with the revised Energy Efficiency and Conservation Strategy, including:

• further energy efficiency measures, including energy use audits, educating staff on using less electricity, low-energy lighting systems, more efficient heating and cooling systems, and purchase of equipment that uses less electricity;
• travel measures, which might include workplace travel plans to eliminate unnecessary journeys, use of more fuel-efficient vehicles, and alternatives to transport such as video-conferencing facilities.

The Ministry will gather more accurate information on the greenhouse gas emissions linked to our energy and electricity use, transport (including domestic and international air travel), and waste sent to landfill. By early 2008, we will have plans in place to reduce our emissions further and offset unavoidable emissions.

In terms of waste management we will be implementing further initiatives around waste reduction and recycling systems as part of a sustainable action plan and the Govt3 initiative. We will be refining our system of measurement to ensure that we are setting and achieving our targets.

The Ministry recognises that how it manages its procurement practices and makes its longer-term investment decisions (for example, asset replacements, delivery of services, accommodation needs and so on) impact on how we manage our environmental impact. We will be reviewing our procurement practices to ensure they take account of these issues.

Ministry of Economic Development: Organisational Chart

• Larger, printable version of "Organisational Chart" [157 kB GIF file]
• Text description of "Organisational Chart"

Financial Summary

In 2007/2008 the Ministry expects to earn $72.953 million (GST exclusive) in revenue from the Crown and $49.316 million (GST exclusive) from other purchasers of the services it will supply under the 18 departmental output expenses detailed in this report. The Ministry expects to incur expenses of $124.911 million (GST exclusive) in providing these services.

The Ministry expects to incur a deficit of $2.642 million in 2007/2008.

In addition, the Ministry administers the following non-departmental (GST exclusive) appropriations:

• Output expenses across six Votes (Commerce; Communications; Consumer Affairs; Energy; Economic, Industry and Regional Development; and Tourism) totalling $393.117 million (including depreciation expense) for services supplied by the Commerce Commission, Securities Commission, Accounting Standards Review Board, Takeovers Panel, New Zealand Trade and Enterprise, Electricity Commission, New Zealand Tourism Board, New Zealand Citizens Advice Bureaux, and local and national delivery organisations for economic, industry and regional development programmes.
• Appropriations across five Votes (Commerce; Communications; Energy; Economic, Industry and Regional Development; and Tourism) totalling $155.522 million for regional development programme initiatives and grants, subscriptions and other expenses.
• Six multi-year appropriations of $51.580 million of up to five-year periods spanning 2004/2005-2011/2012. These appropriations reflect:
  • a multi-year appropriation in Vote: Communications totalling $6.380 million over a four-year term between 2005/2006 to 2008/2009 for digital strategy initiatives;
  • five multi-year appropriations totalling $42.200 million in Vote: Energy over three- to five-year terms between 2004/2005 up to 2011/2012 to provide for non-operating and maintenance security of supply costs relating to the Whirinaki reserve generation station, purchase of demand side management and reserve energy production, and for deployment of marine energy devices; and
  • one multi-year appropriation in Vote: Economic, Industry and Regional Development totalling $3 million, applying over a three-year term between 2007/2008 and 2009/2010 for the 3D Digital Graphics Cluster.
• Capital investments totalling $30.030 million (GST exclusive) to New Zealand Trade and Enterprise ($1.420 million) for development of the Asian Initiatives, to New Zealand Venture Investment Fund Limited for the Seed Co-investment Fund ($8 million) and the Venture Investment Fund ($20 million), and to Sprint International New Zealand ($0.610 million) for the provision of text phones and relay services for hearing and speech impaired people.

The Ministry is responsible for making payments for the services supplied within appropriation under non-departmental output expenses and for other expenditures on behalf of the relevant Vote Ministers. Each non-departmental output expense provider is directly accountable to the responsible Minister for its performance. The Ministry is responsible for managing and monitoring contracts with non-departmental output expense providers on behalf of the responsible Minister.

The Ministry expects to collect $246.858 million of Crown revenue in 2007/2008, with the major portion coming from levies on electricity industry participants and energy resource levies and royalties.

Details of how the non-departmental appropriations will be applied appear in Parts B1, B2, C2, D and E of Votes: Commerce; Communications; Consumer Affairs; Energy; Economic, Industry and Regional Development; and Tourism, in the Estimates of Appropriations for the Government of New Zealand for the year ended 30 June 2008.

Financial Highlights

The most significant movements in budgets between 2006/2007 and 2007/2008 are explained below.

Revenue Crown

Revenue Crown forecast to be earned for departmental outputs is forecast to increase by $3.862 million, mainly reflecting:

• increased responsibilities to ensure that providers of KiwiSaver products comply with statutory minimum standards and that investors in KiwiSaver products are adequately protected;
• increased funding to support the implementation of the Insolvency Act 2006 and new functions on the Official Assignee;
• increased funding in 2007/2008 to develop and implement the Biofuels Sales obligation and fuel quality legislation;
• phasing of work associated with the management and funding of oil stocks to meet International Energy Agency obligations;
• additional funding from 2007/2008 for the development and implementation of a single government procurement policy with a stronger emphasis on sustainability issues; and
• phasing of work associated with developing and implementing the Buy Kiwi Made programme, including a media marketing campaign.

These changes are partly offset by the following forecast decreases resulting from:

• the phasing of implementing a regional statistics programme, where funding ceased in 2006/2007;
• one-off costs in 2006/2007 relating to preliminary work and pre-staging activities associated with the national stadium project and the subsequent finals venue for hosting the Rugby World Cup in 2011;
• higher funding provided in 2006/2007 for travel costs in support of WTO negotiations and bilateral CEP/FTAs;
• phasing of work associated with the implementation of the government's decisions arising out of the Telecommunications Stocktake and Telecommunications (No. 2) Act 2006;
• the phasing of funding between years to run the tender process for KiwiSaver, and provide input into the policy and legislative processes, which was completed during 2006/2007;
• one-off legal costs incurred in 2006/2007 associated with the Treaty of Waitangi Claim WAI 262.

Other Revenue

Other revenue forecast to be earned for departmental outputs is forecast to increase by $2.339 million, mainly reflecting:

• fee changes associated with the Companies Office registry activities;
• the forecast introduction of new levies associated with the implementation of the LPG safety regime; and
• one-off increase in forecast revenue associated with holding the 2007 New Zealand Petroleum Conference.

These changes are partly offset by the following forecast decreases:

• the full year impact in 2007/2008 resulting from the transfer of functions of the Electrical Workers Registration System to the Department of Building and Housing on 1 September 2006;
• the phasing of forecast government actuary revenue for processing applications for tax exemptions on schemes; and
• forecast marginal cost increases and associated revenue relating to trademark and patent applications and renewals in 2006/2007.

Output Expenses

Output expenses are forecast to increase by $4.452 million mainly reflecting the expense side of the non-forecast related revenue changes referred to above.

Forecast Net Surplus/(Deficit)

The Ministry's net deficit is forecast to reduce by $1.749 million mainly reflecting the forecast impact of a long-term strategy to reduce memorandum account balances administered by the Ministry.

Memorandum accounts are operated in Registration and Provision of Statutory Information, the Registration and Granting of Intellectual Property Rights (both in Vote: Commerce), Administration of the Radiocommunications Act 1989 (Vote: Communications), and the Motor Vehicle Traders Registration activities (Vote: Commerce and Vote: Consumer Affairs).

Further information on how the Ministry is working towards reducing surpluses further are outlined in the Forecast of Memorandum Accounts Balances statement that forms part of the forecast financial statements.

Equity

Taxpayers' Funds are forecast to remain at the same level.

The following diagram represents the contribution each Vote makes to the Ministry's total departmental output expense appropriation base:

• Larger, printable version of "Contribution of Vote to the Ministry's Total Departmental Expense Appropriation Base" [29 kB GIF file]
• Text description of "Contribution of Vote to the Ministry's Total Departmental Expense Appropriation Base"

Departmental Capital Expenditure

(To be incurred in accordance with section 24 of the Public Finance Act 1989.)

The forecast capital expenditure for the 2006/2007 financial year reflects both the replacement and/or upgrade of existing assets including the further development of registry databases, to assist the Ministry to deliver on its programme of work.

The profile of the Ministry's capital expenditure programme reflects the Ministry's need to ensure that all necessary capital expenditure is undertaken to protect and develop its capability, ensuring that priority goes to those that meet its overall strategic objectives.

The Ministry will continue to adopt processes that:

• ensure capital is directed to highest priorities across the Ministry and we gain benefits from rationalisation where possible;
• ensure that capital is invested in areas that meet the medium to long-term objectives associated with building a learning organisation;
• develop strategies well in advance to address forecast capital requirements; and
• integrate effective capital planning into Ministry-wide priorities and strategies.

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