Contract Management Capability in DHHS: Service Agreements

Tabled: 20 September 2018

3 Staff skills, capabilities and capacity

DHHS service agreement staff need to strike a balance between managing funded organisations' performance in accordance with contractual requirements and partnering with them so that they are best placed to provide quality services to clients. The varied and often competing priorities of service agreement staff reinforce the need for DHHS to clearly define their roles, including key skills and capabilities. DHHS also needs to provide all staff with sufficient opportunities to acquire and develop key skills and capabilities over time.

In this part, we assess:

  • whether DHHS has defined the skills and capabilities necessary to manage service agreements
  • whether DHHS has developed a learning and development pathway for service agreement staff that reflects defined skills and capabilities
  • how DHHS service agreement staff perceive their capacity to manage service agreements.

3.1 Conclusion

While retaining its relationship management approach, DHHS is increasing the focus of its service agreement staff on performance management of funded organisations. This follows a series of reviews that highlighted gaps in how DHHS monitors and manages service agreement performance. This increased focus is consistent with better practice principles for contract management, but varying sector capability and depth will pose challenges to its implementation.

This shift is made even more difficult by the absence of a structured and comprehensive learning and development framework for service agreement staff. Learning and development offerings focus too heavily on systems and processes and are insufficient for giving staff the key skills and capabilities needed to manage service agreements. Poor uptake of individual performance plans among service agreement staff has further limited their opportunities to acquire skills and develop.

Combined with the wide geographic spread of service agreement staff, these issues have contributed to a lack of staff awareness of their roles and of the extent of their responsibilities.

3.2 Defining required staff skills and capabilities

DHHS restructured its service agreement management function at the central office, divisional and area level across the first half of 2018.

As part of the restructure process, in 2017 DHHS commissioned a review of the current system of service agreement management (the restructure review). It found there was conflict in DHHS's roles of funder, provider, contract manager and regulator, and confusion about the multiple functions of LEO and program adviser roles. The report proposed splitting the regulatory and contract management functions. DHHS implemented this in multiple stages:

  • It created a new central Regulatory Enforcement Unit in November 2017 that focuses on system-wide regulation of health and human service practitioners, providers and facilities.
  • It created four divisional Regulatory Compliance and Enforcement teams in June 2018 to undertake inspections, investigations and enforcement activities across specified regulatory schemes applying to community services regulated by DHHS.
  • It also created a new central Service Agreement Performance Unit in February 2018 to oversee and ensure funded organisation performance at a statewide level.

Another key change implemented in June 2018 was to combine the roles of LEOs and program advisers into a single service agreement adviser role that extends across the health and human services portfolios. These roles sit within the new Agency Performance and System Support Units in each of DHHS's 17 areas. DHHS expects that this new role will have an increased focus on performance management of funded organisations while keeping a relationship management focus. We examined the required skills and capabilities of previous LEO and program adviser roles, along with the recently announced service agreement adviser roles.

Key contract management skills and capabilities

Figure 3A details the key skills and capabilities of contract managers, based on the ANAO's better practice guide and the VGPB's VPS Procurement Capability Framework.

Figure 3A
Key skills and capabilities of contract managers

Category

Key skills and capabilities

Commercial/financial

Understands and applies relevant laws and accountability requirements and financial arrangements.

Performance management

Monitors service levels, provides feedback and manages underperformance.

Interpersonal/relationship building

Builds strong working relationships, encourages cooperation and communication.

Influence and negotiation

Applies negotiation skills and expertise to ensure benefits are realised and continuous service delivery improvements are identified and implemented.

Problem-solving and conflict management

Maintains a positive approach to solving problems and encourages mutual cooperation to resolving disagreements.

Organisational context

Understands the operating environment of the organisation.

Leadership

Manages team resources to maximise performance.

Source: VAGO based on the ANAO's better practice guide and the VGPB's VPS Procurement Capability Framework.

The restructure review commissioned by DHHS to support the proposed restructure of its service agreement management function identified the need for contract managers to have similar skills and capabilities.

Position descriptions for service agreement staff

Previous LEO and program adviser roles

We examined the previous position descriptions for LEOs and program advisers to see whether they addressed the above skills and capabilities. We found that the position descriptions for these roles did not explicitly focus on the performance management and commercial/financial skills identified in the ANAO's better practice guide and VGPB's VPS Procurement Capability Framework. However, other central and divisional DHHS staff are responsible for monitoring the financial performance of funded organisations under both the previous and current organisational structure. The LEO and program adviser position descriptions more clearly reflected the remaining five skills identified in Figure 3A, although they were not identical.

LEO position descriptions focused on softer skills such as service excellence, customer/client focus and decisiveness, while program adviser position descriptions focused on analysis and written communication skills. This reflects the historical split between the service agreement roles in health and human services. Both position descriptions reflected DHHS's strong focus on supporting and collaborating with funded organisations, however, they did not commensurately recognise the necessary contract management skills required of the role.

New roles

We performed the same analysis for the new roles within the newly created Agency Performance and System Support Units in each DHHS area, including service agreement adviser roles and other new roles that relate to managing service agreements. We found that:

  • the senior and principal service agreement adviser roles have a clearer focus on managing and monitoring the performance of funded organisations
  • the VPS Grade 3 and 4 service agreement adviser position descriptions focus on similar skills to the previous roles, and do not have an increased focus on the performance management-related skills identified in the ANAO and VGPB guides
  • three new roles created within each DHHS area's Agency Performance and System Support Unit would focus on improving funded organisations' performance in relation to their contractual obligations.

It is evident from the new positions descriptions—as well as the proposed functions of the newly created regulatory and performance units—that DHHS is more explicitly focusing on managing the performance of funded organisations against contractual obligations.

Our discussions with LEOs, program advisers and funded organisations highlighted concerns with the increased focus on performance management:

  • Funded organisations consistently placed high importance on DHHS managing service agreement performance in a supportive and collaborative manner.
  • LEOs and program advisers in the Western Melbourne and Ovens-Murray Areas also placed high importance on being able to manage service agreements in a way that supports and collaborates with funded organisations.
  • Multiple DHHS staff expressed concern that the proposed change to a more performance management-focused service agreement adviser role that does not specialise in health or human services would damage stakeholder relationships and diminish awareness of the environment that funded organisations operate within.
  • LEOs and program advisers said they felt poorly equipped to manage service agreements under the proposed new arrangements, chiefly due to a historical lack of training focused on developing their contract management-related skills.

The next section examines the range of training programs available to service agreement advisers in further detail.

Successfully adopting a more performance management-focused approach will require DHHS to actively manage these concerns. In particular, it is important that DHHS:

  • tailor its engagement approach to the capability of each funded organisation, as well as to the risks associated with the services they provide
  • clarify its expectations of service agreement staff regarding sector support and partnerships.

3.3 Providing learning and development pathways

Overall, we found that:

  • learning and development programs focus heavily on applying processes and using service agreement systems like SAMS2 and do not sufficiently focus on good practice principles for contract or risk management
  • there is a lack of focus within DHHS on individual performance planning and review for service agreement staff.

In terms of orientation and induction, DHHS centrally provides an 'Introduction to managing service agreements' training program for new service agreement advisers and other relevant staff that:

  • outlines the key elements of the service agreement
  • confirms key requirements of staff in their day-to-day work across all stages of service agreement management, from negotiation through to performance assessment
  • details functions for managing and monitoring service agreements.

The introductory program includes high-level content on good practice contract management and governance principles that is confined to a series of brief PowerPoint slides. This content alone is insufficient to provide service agreement advisers with the contract management and governance skills needed to effectively manage service agreements and the performance of funded organisations.

Figure 3B details all of DHHS's centralised training programs that relate to managing service agreements. We found that these programs focus on how to use relevant DHHS systems and follow established processes.

Figure 3B
DHHS training programs for managing service agreements and frequency of delivery

Training program

Duration

Frequency (2018)

Introduction to managing service agreements (incorporating FOPMF)

Two days

March, May, July, September, October, November

SAMS2 overview

Half day

Monthly

SAMS2 general

Two days

Monthly

FAC

Full day

Monthly

Desktop review

Full day

February, April, June

Note: Excludes any local training programs that are designed and delivered at a divisional or area level.
Source: VAGO based on DHHS's 2018 training calendar.

A desktop review is an annual assessment of a funded organisation's performance based on information collected throughout the year. It forms part of FOPMF.

DHHS does not have a central attendance register for all training programs that would show how many staff have completed courses or induction.

SAMS2 training is compulsory for staff who manage service agreements. Records for SAMS2 General and SAMS2 Overview training in 2017 show that 143 DHHS staff attended these courses. Half of the participants were based in DHHS's central office, and half were based in the divisions. These courses are open to anyone who uses the SAMS2 system.

DHHS also provides online training modules for SAMS2, live monitoring and the SDT reporting system.

The internal report of the restructure review for assessing the organisational redesign of the service agreement management function identified an increased need for training.

Staff views on learning and development pathways

Through our online surveys and face-to-face interviews, we sought the views of DHHS service agreement staff on whether:

  • the orientation and induction offered for their role gave them the basic knowledge and skills needed to manage service agreements
  • training provided by DHHS helped to build and maintain the skills needed to manage service agreements
  • staff have an individual performance plan that addresses learning and development needs.

We summarise all DHHS staff survey responses in Appendix D.

Overall the survey results highlight that a significant proportion of staff are dissatisfied with DHHS's learning and development framework for managing service agreements.

Staff views on orientation and induction

Figure 3C summarises DHHS staff responses to our survey question about whether the orientation and induction for their role was effective. It shows that 29 per cent of respondents viewed their orientation and induction as either 'not so effective' or 'not at all effective'.

Figure 3C
Survey responses—DHHS staff
Question 8: How effective has the orientation and induction provided by DHHS been at giving you the basic skills and knowledge needed to manage service agreements?

Survey responses—DHHS staff. Question 8: How effective has the orientation and induction provided by DHHS been at giving you the basic skills and knowledge needed to manage service agreements?

Source: VAGO.

There was little difference in the survey responses to this question between human services-focused staff and health services-focused staff. However, there were differences in the responses across DHHS divisions:

  • East Division staff were most satisfied with their orientation and induction, with just 18 per cent of respondents reporting that it was either 'not so effective' or 'not at all effective'.
  • West Division staff were least satisfied with their staff orientation and induction, with 34 per cent of respondents reporting it was either 'not so effective' or 'not at all effective'.

We also asked the DHHS staff surveyed to suggest how DHHS could improve its orientation and induction for new staff. Respondents' open-text responses commonly highlighted the need for:

  • a more structured and standardised program for giving new staff the basic skills needed to manage service agreements
  • improved mentoring of new staff by more experienced colleagues
  • more frequent orientation and induction offerings for new staff
  • more accessible guidance material for new staff to access outside of formal orientation and induction activities
  • a risk-based approach to allocating new staff to manage service agreements and funded organisation performance.

Our discussions with central and regional DHHS staff highlighted concerns with staff orientation and induction for managing service agreements. Specifically, various LEOs and program advisers advised that they never received a formal orientation or induction for their role and had to rely on the experience and knowledge of nearby colleagues instead.

Staff views on training

Figure 3D summarises DHHS staff responses to our question about the effectiveness of training in building and maintaining their service agreement management skills. It shows that 32 per cent of respondents viewed training as either 'not so effective' or 'not at all effective'.

Figure 3D
Survey responses—DHHS staff
Question 9: How effective has training provided by DHHS been at building and maintaining the skills you need to manage service agreements?

Survey responses—DHHS staff. Question 9: How effective has training provided by DHHS been at building and maintaining the skills you need to manage service agreements?

Source: VAGO.

Human services-focused staff reported higher levels of dissatisfaction with their training than health services-focused staff. Specifically, 36 per cent of human services-focused staff viewed training as either 'not so effective' or 'not at all effective', compared with 26 per cent of health services-focused staff.

We also found differences in survey responses across DHHS divisions:

  • Survey respondents from DHHS's East Division were the most satisfied with training of all divisions. Thirty-six per cent of East Division respondents viewed training as either 'very effective' or 'extremely effective'.
  • Survey respondents from the North Division were the least satisfied with training. Only 12 per cent of North Division staff viewed their training as either 'very effective' or 'extremely effective'.

We asked the DHHS staff surveyed to suggest how DHHS could improve its training of service agreement staff. Respondents' open-text responses commonly highlighted the need for:

  • clearer expectations regarding service agreement management roles so that training programs can be better targeted
  • an overarching learning and development framework that brings together all the skills and knowledge required to manage service agreements, rather than disjointed offerings that focus heavily on systems and processes
  • a redesign of the existing SAMS2 system training
  • increased training frequency and accessibility for regional staff
  • more web-based training programs.

Our discussions with regional DHHS staff highlighted concerns with the training offered for managing service agreements. Specifically:

  • staff working in the Western Melbourne and Ovens-Murray Area offices expressed the need for increased training in contract management and governance
  • Wangaratta-based staff highlighted the logistical challenges of attending service agreement training programs that are only available in Melbourne.
Staff views on individual performance plans

Figure 3E summarises DHHS staff responses to our question about whether they have an individual performance plan. Only 76 per cent of respondents reported that they have one.

Figure 3E
Survey responses—DHHS staff
Question 11: As a service agreement monitoring staff member, do you (or did you) have an individual performance plan?

Survey responses—DHHS staff. Question 11: As a service agreement monitoring staff member, do you (or did you) have an individual performance plan?

Source: VAGO.

Based on the survey results, we found that the use of individual performance plans was particularly low for human services-focused staff and North Division staff:

  • Seventy-three per cent of human services-focused staff reported that they have a performance plan, compared with 82 per cent of health services-focused staff.
  • The North Division had the lowest proportion of respondents that reported having a performance plan (66 per cent).
  • DHHS's central office had the highest proportion of staff that were not sure if they had a performance plan (14 per cent).

We asked DHHS staff survey respondents who reported having a performance plan about how often their performance was reviewed against it with their manager. We summarise the responses to this question in Figure 3F. It shows that staff most commonly review their performance against their plan twice per year (58 per cent), in accordance with DHHS's Performance and Development Process Policy. This trend was consistent across DHHS divisions and between health and human services-focused staff.

Figure 3F
Survey responses—DHHS staff
Question 12: How often do you (or did you) review performance against your individual performance plan with your manager?

Survey responses—DHHS staff. Question 12: How often do you (or did you) review performance against your individual performance plan with your manager?

Source: VAGO.

We also asked DHHS staff about how effective the individual performance planning and review process had been at addressing their learning and development needs. Figure 3G shows that 48 per cent of staff viewed the process as 'somewhat effective', while 32 per cent viewed it as either 'not so effective' or 'not at all effective'.

Figure 3G
Survey responses—DHHS staff
Question 13: How effective has the individual performance planning and review process been at addressing your learning and development needs?

Survey responses—DHHS staff. Question 13: How effective has the individual performance planning and review process been at addressing your learning and development needs?

Source: VAGO.

We found some variation in staff views on the individual performance planning process between the health and human services portfolios, as well as between DHHS divisions:

  • Human services-focused staff were less satisfied than their counterparts in health services-focused roles—38 per cent viewed the process as either 'not so effective' or 'not at all effective', compared with 28 per cent of health services-focused staff.
  • Staff in DHHS's North Division were particularly dissatisfied with the process compared to other divisions, with 48 per cent of respondents viewing the process as either 'not so effective' or 'not at all effective'.

3.4 Staff capacity to manage service agreements

Our survey of DHHS staff also sought their views on their capacity to manage services agreements. This included questions on:

  • the proportion of staff tasks performed that are not in their position description
  • the amount of time staff spend on monitoring and managing the performance of funded organisations
  • the amount of time staff spend on other tasks.

In particular, the survey results show that a high proportion of staff believe much of their work is focused on tasks that are outside their position description. This is consistent with the restructure review commissioned by DHHS. It found that staff time and effort spent on service agreement activities had been compromised by 'a lack of clarity in the interface between contract management, relationship management or sector capability building, and the appropriate time for LEOs and PASAs to spend on each of these functions'. The restructure review also found that, in the absence of role clarity, service agreement staff had 'taken on responsibility for managing pressing client needs, rather than managing compliance of service providers, nor addressing systemic issues and gaps'.

Tasks performed outside position descriptions

It is important that service agreement staff focus their effort on the core functions of their role. Having staff regularly perform tasks that are outside their role—such as addressing client needs—limits the capacity to monitor and address funded organisation performance issues.

Figure 3H summarises survey responses to our question on the proportion of staff tasks performed that are outside their position description. It shows that:

  • 28 per cent of respondents believe that somewhere between 25 and 50 per cent of their tasks are outside their position description
  • 21 per cent of respondents believe that over 50 per cent of their tasks are outside their position description.

Figure 3H
Survey responses—DHHS staff
Question 14: As a service agreement monitoring staff member, what proportion of tasks that you perform are NOT reflected in your position description?

Survey responses—DHHS staff. Question 14: As a service agreement monitoring staff member, what proportion of tasks that you perform are NOT reflected in your position description?

Source: VAGO.

These results did not vary significantly across DHHS divisions. However, there was some variation between the health and human services portfolios. Fifty-two per cent of human services-focused staff believe that they spend at least 25 per cent of their time on tasks that are outside their position description, compared with 42 per cent of health services-focused staff.

Time spent on monitoring and managing funded organisation performance

Figure 3I summarises survey responses to our question on how much time DHHS staff spend per day on monitoring and managing funded organisation performance. It shows staff spending variable amounts of time on these tasks, with 21 per cent of respondents estimating that they spend three to four hours per day on monitoring and managing organisations' performance.

Figure 3I
Survey responses—DHHS staff
Question 15: On average, how much time per day do you spend monitoring or managing the performance of funded organisations?

Survey responses—DHHS staff. Question 15: On average, how much time per day do you spend monitoring or managing the performance of funded organisations?

Source: VAGO.

There was some variation in the responses to this question between DHHS divisional and central office staff:

  • In central office, 9 per cent of surveyed staff who manage service agreements estimate that they spend three hours or more per day on monitoring and managing funded organisation performance.
  • Between 50 and 54 per cent of staff in DHHS's four divisions estimated that they spend three hours or more on these same tasks.

We also found that the results varied between health services-focused staff and human services‑focused staff, with 44 per cent of health services-focused staff spending two hours or more per day on monitoring and managing funded organisation performance, compared to 63 per cent of human services-focused staff.

Time spent on other tasks

Figure 3J summarises survey responses to our question on how much time DHHS staff spend per day on other tasks beyond monitoring and managing funded organisation performance. Like Figure 3I, it shows staff report spending variable amounts of time on these other tasks.

Figure 3J
Survey responses—DHHS staff
Question 16: On average, how much time per day do you spend on other tasks (i.e. beyond monitoring or managing the performance of funded organisations)?

Survey responses—DHHS staff. Question 16: On average, how much time per day do you spend on other tasks (i.e. beyond monitoring or managing the performance of funded organisations)?

Source: VAGO.

These results did not vary significantly when broken down by DHHS portfolio or division. However, the results did vary between DHHS central office and divisional staff. Specifically, 56 per cent of central office staff estimated that they spend five hours or more per day on other tasks, while between 15 and 25 per cent of divisional staff spend five hours or more per day on the same tasks. This reflects the fact that central office staff will often manage service agreements as a secondary part of their role.

3.5 Corporate knowledge risks

Agencies need to retain the knowledge of key employees in the event that they are unavailable or leave their role.

We found that a significant amount of corporate knowledge relating to the SAMS2 information system is held exclusively by two key DHHS staff—one with knowledge of the system's infrastructure and another with knowledge of the system's operational functions.

One of these two staff members recently moved into another role within DHHS but is still regularly called upon to assist with SAMS2-related issues and queries. DHHS currently has no formal measures to capture the knowledge of these two staff.

Considering that SAMS2 is DHHS's main information system for storing service agreement information and managing performance, this poses a significant risk to DHHS and its ongoing capacity to manage service agreements.

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