Read the attached case and answer the following questions: 

• What motivational problem is this organization facing? How do you know?

• What theories and behaviors from previous chapters have you  recognized in this case (pick 2-3). How are those concepts related to  the problem the organization is having?

CASE PROGRAM 2004-6.1

Staff turnover in the Victorian Treasury (A)

In July 2001, Laurinda Gardner, Executive Director of Strategic Management in the

on staff turnover. The report revealed that annual turnover was very high among DTF
staff mostly economists and accountants and even higher among recent recruits.

The Victorian Government

Geographically, Victoria was the smallest of the five mainland states in Austra
federal system of government, but had the second-largest population (4.8 million

basic services such as police, the fire service, health, education, transport, ports, urban
planning, social welfare, environmental conservation and others.

-chamber parliament elected every four
years, with the majority party in the lower house, the Legislative Assembly, forming a
government. The chief political executive was the Premier, who chaired a state Cabinet
of about 20 ministers, which was the key decision-making body. Serving those
ministers was a public service organised into eight departments (almost all of which
had more than one minister), with a variety of other statutory authorities. In 2001

1 and the Victorian public sector had $49
billion in assets and 230,000 employees.

This case was written by Professor John Alford and Marinella Padula, Australia and New Zealand School
of Government. It has been prepared as a basis for class discussion rather than to illustrate either effective
or ineffective handling of a managerial situation. The assistance of the Department of Treasury and
Finance is gratefully acknowledged.

Cases are not necessarily intended as a complete account of the events described. While every reasonable
effort has been made to ensure accuracy at the time of publication, subsequent developments may mean
that certain details have since changed. This work is licensed under Creative Commons Attribution-
NonCommercial-NoDerivatives 4.0 International Licence, except for logos, trademarks, photographs and
other content marked as supplied by third parties. No licence is given in relation to third party material.
Version 11-02-2005. Distributed by the Case Program, The Australia and New Zealand School of
Government, www.anzsog.edu.au.

.

1 All figures are in Australian dollars; this amount is approximately $US13.3 billion.

The Department of Treasury and Finance

The Department of Treasury and Finance was responsible for policy advice to the
Victorian Government on economic, financial and resource management, and

prepared and delivered the state budget, collected revenues and was responsible for
economic policy, and the Minister for Finance, who was responsible for financial
reporting and management, procurement policy, property and superannuation.
DTF played a central role in the Victorian Government, controlling budgeting and
spending by all departments. Any policy initiative, revenue measure, or programme
proposal had to be reviewed by DTF for its financial implications before it could go to
Cabinet for approval.

The Department was organised into four main divisions (see Exhibit 1). Of these, the
Budget and Financial Management Division and the Economic and Financial Policy
Division both employed mainly economists and accountants. Typically they had to do
high-level policy work under urgent deadlines. According to Gardner:

analysts sometimes only get two days (occasionally even less) to turn those things
around.

It was not uncommon for 10 or more such reports to arrive at the DTF each week for
analysis, often with only two days turnaround time. While being close to the action and
able to influence major decisions was attractive to many, not everyone was comfortable

,
sometimes requiring sign-off from several layers of management. In addition,
individuals would have to juggle these demands with other core activities.

However, the period leading up to the delivery of the State Budget was the most
demanding, involving months of late nights and weekend work for many. It was also

rdner noted.

Human resources in DTF

operational work of HR, such as payroll, recruitment, and leave administration, was
outsourced to a private firm, Accenture. HR strategy, major policy, and administration

division chiefs and an Accenture partner, meeting monthly.

Eight to ten economists and a similar number of accountants were recruited by DTF
under the Graduate Trainee Scheme each year, and underwent a one-year internship,

3

rotating across three departments. Positions in Treasury were sought after by graduates
as part of one of the typical career paths for economists, which began with a position in
either the Reserve Bank, the Commonwealth Treasury, or a state Treasury (in roughly
that order of preference). After three to five years in one of these bodies, suitably
trained economists became very attractive to major banks or consulting firms.

-3 level, at a salary of
about $40,000, then be promoted over the following years, many reaching VPS-4 or
VPS-5 level, the latter attracting a salary of about $75,000. By that stage, a typical
policy analyst would have had sustained and intensive experience at developing high-
level policy advice under severe time constraints. According to Vin Martin, a DTF
policy director:

–
year internship is competitive for the first two or three years out, although the state of the

Pay levels in the Victorian public service for officers below executive ranks were set not
by each department but rather through a centralised agreement. In general, pay levels
were constrained by the state budget, for which salaries and staff costs were the largest
component.

A recent change of government had seen the push towards centralisation grow stronger,

-size-fits-
need for parity across the public sector, she was finding the DTF had much less
flexibility in the way it was able to reward staff, especially where performance bonuses
were involved.

In 2001, concerned at apparent problems in attracting and retaining policy analysts with
economic or financial training, the Depa
issue. Gardner commissioned SACS Executive Solutions, a human resource consulting
firm, to investigate and recommend strategies for recruiting staff and reducing turnover.

Four areas were examined and presented in the final report. These were: the perceptions
of current employees, those of recently departed employees, those of prospective
employees, and recruitment practices within the organisation and at Accenture.

Overall findings

The SACS report showed that DTF had an annual staff turnover rate in excess of 20
percent.2 In fact, it was close to 28 percent high by comparison with similar
organisations, for which the benchmark was 12 percent and the target maximum was 15
percent. More significantly, the turnover rate was even higher among economists and

higher among females. The report concluded that

2 -motivated forms of staff turnover, such as the end of
fixed

4

staff turnover
is people leaving the organisation within the first two years of their tenure. In excess of 34

However, SACS found no evidence of low morale within the DTF, a factor frequently
associated with elevated turnover.

Former staff

To gain insights from recent former employees, SACS conducted telephone interviews
and focus groups with more than 30 people who had left the DTF during the past 18
months. This group indic
factor in people leaving the organisation. According to the report:

perceived better opportunities to advance their careers. Within the Department it was
sometimes unclear as to what career opportunities existed that people could meaningfully
aspire to. A particular area of concern was the lack of clear communication from the
organisation as to career opportunities
commented that they believed that their time within the Department had made them
attractive prospective employees for a range of organisations both in the public and

Other factors identified inclu

of those we spoke to were regretful of having to leave the Department, commenting
very favourably on the intrinsic interest of the work they had undertaken, as well as the

training and government contacts made DTF alumni highly desirable. Indeed, Martin
observed that banks, in particular, were able to offer salaries well in excess of the

government departments which could provide a short-cut to seniority.

Current staff

Fifty current DTF staff were divided into 10 focus groups and interviewed by SACS.

two years tenure. Current staff were of the impression that increased turnover was a
significant problem within the organisation. They felt that the highly technical nature of

such staff left them back at square one with a replacement, whilst trying to manage an
increased workload.

Clarity of career options within the DTF was the most commonly identified driver of

opportunities outside their own branch and were in some cases unaware even of the

they were often unsure of their readiness to apply. Some employees felt it was easier to
access career opportunities outside the Department than within it.

5

This group also remarked on an apparent mismatch between new recruits and the
organisation. They found some employees joined the DTF only to discover that the style
of the workplace, nature of the work or career opportunities differed from their
expectations. Meanwhile they observed that other employees had come to the DTF with
the express intention of gaining valuable expertise, then moving on.

In terms of working with senior staff within the DTF, current employees noted that they
were extremely technically skilled. However, this group felt that senior members were
less proficient in dealing with people management issues. Assessment of these skills
was not part of their performance criteria and they felt their superiors could benefit from
more training.

Prospective staff

On the recruitment side, the report showed that DTF was quite well regarded as a
prospective employer by a sample of 60 policy and accounting graduates, with 77
percent of the former and 67 percent of the latter seeing the organisation as a valid
employment option. Among positive aspects identified were: secure tenure, the high
level of influence over other government departments, macroeconomic experience, the
variety of work available, and the high quality of training of new recruits. Gardner

Negative aspects mentioned by the graduates were low pay, long

bureaucratic processes, isolation from the commercial sector and lack of career
progression. Gardner also felt that opportunities for personal development were also

Recruitment issues

Current staff members touched on recruitment issues which were echoed elsewhere in
the organisation and in the SACS report. For this section of the report, SACS
interviewed 19 recruiting managers in the DTF drawn mainly from the Budget and
Financial Management and Economic and Financial Policy departments. Nearly 80
percent of these managers had recruited three or more people in the last 12 months.

Overall, 58 percent of managers were satisfied with the success of their recruitment
efforts, while 42 percent were not. Delving a little deeper, SACS discovered that 74
percent of managers would have liked more help from HR services, in other words
Accenture, in improving recruitment outcomes. They wanted to be able to use the
company as a source of guidance and advice on matters of judgement, not just
procedure. Increased flexibility of recruitment options and salary was the second most
cited factor managers felt would assist them (47 percent).

In terms of the timeliness and speed of recruitment activities, 58 percent were
dissatisfied, compared with 42 percent who were satisfied. SACS compiled data from
32 Accenture recruitment assignments and found that the average assignment took 73
days to complete. SACS, who also engaged in similar professional recruitment

SVMP
Comment on Text
You don’t need to read this part for the class discussion.