Introduction

1.1 In November 2017, the Department of Defence (Defence) issued its second five-year cultural change strategy, Pathway to Change: Evolving Defence Culture 2017–22 (the 2017–22 strategy).⁵ The 2017–22 strategy is intended to have the effect of:

… more deeply embedding positive workplace norms which support all of our people and help us to attract the best people in the future.⁶

1.2 The 2017–22 strategy was, in effect, the second phase of a cultural and behavioural change program initiated in 2012⁷ to focus attention on legal and ethical obligations, which the strategy described as follows:

In 2012 Defence embarked on a major program of cultural change called Pathway to Change: Evolving Defence Culture. Pathway to Change embraced all aspects of how Defence works and how it acts, at the individual level and as a whole.

The purpose of Pathway to Change was for Defence to renew its commitment to its core values and to build trust with the Government, the Australian community and, importantly, Defence people. The central focus of Pathway to Change was on values, attitudes and behaviours. Initiatives under Pathway to Change focused on strengthening the capacity of the Australian Defence Force members and the Australian Public Servants, along with Defence Industry personnel, to work together to deliver Defence capability for Australia

… Since 2015, through implementation of the First Principles Review of Defence, leaders are being held more accountable for their actions and for the workplace behaviours of their teams. This has been an important step forward, in moving from the implementation of actions and recommendations of Pathway to Change 2012–2017, to more deeply embedding positive workplace norms which support all of our people and help us to attract the best people in the future.⁸

1.3 In April 2019, 17 months after the release of the 2017–22 strategy, the Secretary of Defence described the centrality of cultural reform to both Defence’s wider ‘One Defence’ reform agenda (initiated by the 2015 First Principles Review: Creating One Defence) and its competitiveness as an employer:

Underpinning defence’s reform agenda has been a cultural change agenda, fostering the right attitudes and behaviours across our organisation.

… The future success of defence and our nation’s security is linked to our ability to attract and retain a motivated, engaged, and innovative workforce and have that workforce serving in different ways that of which they’ve served in the past. It’s about having the right people with the right capabilities and the right attitudes and behaviours to achieve the right effect. Our cultural reform agenda will go a long way in helping us achieve it.⁹

1.4 On 27 November 2020, the Minister for Defence launched Lead the Way: Defence Transformation Strategy (2020 Transformation Strategy) which: updated the ‘One Defence’ concept¹⁰ in the context of the ‘Defence Enterprise’¹¹; announced that a ‘Continuous Improvement Culture’ was a key initiative¹²; and included ‘one set of shared Defence Values’.¹³ The 2020 Transformation Strategy states that:

Cultural reform within Defence has been a continuous and evolving journey, and there will always be more work for us to do as our people, our community and our demographics continue to change over time.

… The success of the Defence Transformation Strategy, and consequently Defence’s ability to deliver on government’s strategic objectives, hinges on how our people choose to interact and conduct themselves, both individually and collectively.¹⁴

1.5 In respect to the 2017–22 strategy, the 2020 Transformation Strategy stated that:

Cultural reform undertaken through Pathway to Change: Evolving Defence Culture 2017–2022 continues to embed workplace norms and behaviours that support Defence people. Defence will continue to progress initiatives to improve our workplace culture, including the development of targeted diversity action plans, including disability in the workplace, LGBTI+, cultural and linguistic diversity, and Indigenous reconciliation.¹⁵

1.6 Defence advised the ANAO in January 2021 that:

… the [2020] Defence Transformation Strategy sets the vision and framework for Defence’s enduring transformation effort with a focus on capability, strategy and reform. It is a capstone strategy, which guides and prioritises activity in Defence, including supplementary strategies focussed on specific areas of improvement (such as culture, innovation, strategic workforce planning).

Pathway to Change 2017–22 remains extant with a review of Pathway to Change 2017–22 to commence in the first six months of 2021 (as referred to in the Lead the Way: Defence Transformation Strategy Implementation Plan).

The Transformation Strategy requires a culture of continuous improvement in Defence, delivered through three key elements: Values and Behaviours (with one set of Defence Values and Behaviours launched on 1 October 2020); Clear accountabilities; and Data-informed decisions.

In regard to Values and Behaviours, the Transformation Strategy makes it clear that through Pathway to Change 2017–22 Defence will continue to embed workplace norms and behaviours, and progress the more diverse and inclusive culture required to enhance capability.

The review of Pathway to Change 2017–22, will in turn focus on how to continue to embed the Defence Values and Behaviours (launched 1 October 2020), which play a significant role in evolving all aspects of Defence culture. It will also focus on furthering diversity and inclusion, and gender equality, to enhance Defence’s effectiveness and capability and support continuous improvement efforts by ensuring that our workforce profiles reflect the community that Defence serves.

With Pathway to Change 2017–22 drawing to a close in 2022, it is timely to consider all culture priorities to meet future challenges.

Importantly the next blueprint for Defence culture (to be developed in 2021 in preparation for the close out of Pathway to Change 2017–22), will be informed by the IGADF Afghanistan Inquiry Report Implementation Plan (once finalised and agreed).¹⁶

1.7 The 2020 Transformation Strategy was launched a week after the Chief of the Defence Force (CDF) released a public version of the Inspector-General of the Australian Defence Force Afghanistan Inquiry Report, which made findings regarding the alleged unlawful killing of civilians and prisoners by some members of the Army’s Special Operations Task Group¹⁷, and identified a range of operational, organisation and cultural issues in the relevant Army units.¹⁸ CDF stated that: ‘These findings allege the most serious breaches of military conduct and professional values’.¹⁹

1.8 The 2020 Transformation Strategy document did not reference the Inspector-General of the Australian Defence Force Afghanistan Inquiry Report. In January 2021, Defence advised the ANAO that:

The Defence Transformation Strategy was released on 27 November 2020; a short period of time post the release of the Inspector-General’s findings. Noting the confidential nature of the conduct of the inquiry, the detail of the findings and recommendations was not known during the development of the Transformation Strategy.

Once the Implementation Plan has been developed and agreed, the relevant themes will be mapped to the transformation Strategy and inform the next steps in regard to cultural change.

1.9 Defence further advised the ANAO in April 2021 that work currently occurring under the 2020 Transformation Strategy incorporates Defence’s response to the inquiry.

Pathway to Change: Evolving Defence Culture 2017–22 (the second strategy)

1.10 Defence is now more than three years into the second five-year cultural change strategy for evolving its culture and behaviour. The 2017–22 strategy is the principal focus of this performance audit.

1.11 Box 1 (below) provides background on Defence’s reported implementation of its first five-year cultural strategy, titled Pathway to Change: Evolving Defence Culture: A Strategy for Cultural Change and Reinforcement.

Note a: Department of Defence, Pathway to Change: Evolving Defence Culture: A Strategy for Cultural Change and Reinforcement, Department of Defence, Canberra, 2012, p. 4.

Note b: For the 24 recommendations that Defence agreed in principle, Defence noted that it supported the spirit and intent of the recommendations, however it intended to implement some recommendations further than what was recommended in the reviews, and some others required further consideration before they were implemented.

Note c: Department of Defence, Pathway to Change: Evolving Defence Culture 2017–22, 2017, p. 1.

Note d: Department of Defence, Pathway to Change: Evolving Defence Culture: A Strategy for Cultural Change and Reinforcement, Department of Defence, Canberra, 2012.

Note e: ibid., p. 6.

Note f: ibid.

Source: Department of Defence documentation.

1.12 In the 2017–22 strategy, Defence stated that:

… Pathway to Change remains as relevant to Defence and its future now as it did in 2012. The work of cultural change must continue so we can continue to build an organisation capable of meeting Government objectives, sustaining the trust and commitment of the Australian community, and of those people who work in Defence.

1.13 Defence positioned its second five-year cultural reform strategy as a ‘refreshed statement of cultural intent and the priority areas of focus for 2017–2022’. In its 2017–18 annual report, following the release of the strategy, Defence stated that:

The next iteration of cultural reform shifts efforts from implementing key actions and recommendations to an environment where leaders are accountable for creating a more positive culture. This transition to a leader-led approach to culture is linked to, and supported by, the One Defence Leadership Behaviours resulting from the First Principles Review. This diffusion of responsibility for positive cultural reform outcomes has seen the development of a range of tailored cultural reform initiatives across the Groups and Services that reflect the differing needs of areas across Defence.²⁰

1.14 The Communication Plan for the second strategy stated that:

The aim of Pathway to Change: Evolving Defence Culture 2017–22 is for the cultural intent statement and six priorities to underpin and unify cultural reform efforts across Defence, while allowing scope for Groups and Services to interpret and implement as appropriate to their context.

1.15 The statement of cultural intent, as articulated in the second strategy, is reproduced in Box 2 below. The statement sets out Defence’s envisioned or desired culture and expectations in terms of accepted behaviours. In addition to the statement of cultural intent, Defence personnel must comply with the requirements of relevant legislation and employment codes, including the Australian Public Service (APS) Code of Conduct, APS values, and frameworks applying to the Australian Defence Force (ADF).

Source: Department of Defence.

1.16 The second strategy sets out six cultural reform priorities:

• leadership accountability;
• capability through inclusion;
• ethics and workplace behaviours;
• health, wellness and safety;
• workplace agility and flexibility; and
• leading and developing integrated teams.

1.17 Defence advised the ANAO in September 2020 that the second strategy is considered to be an ‘umbrella strategy’, which encompasses all of Defence’s human resources policies, programs and activities. In January 2021, Defence further advised the ANAO that:

Defence often refers to Pathway to Change 2017–22 as an umbrella strategy in order to convey that (i) it provides the overarching policy position for culture in Defence, and (ii) that the scope of activity that sits under it is significant, encompassing initiatives at the enterprise level, as well as the many lines of effort delivered by the Groups and Services. The terminology, however, tends not to be used in written communication.²¹

1.18 In the November 2020 Defence Transformation Strategy²², Defence referred to the strategy under a heading of ‘Diversity and Inclusion’. Box 3 below reproduces the statements made about the second strategy in the 2020 Defence Transformation Strategy document.

Source: Department of Defence, Lead the Way: Defence Transformation Strategy, 2020, p. 30.

Administrative arrangements within Defence

1.19 Defence advised the ANAO in January 2021 that:

Pathway to Change 2017–22 sets out the work of cultural reform is to occur at both the enterprise level and at the local level, within Defence Groups and Services. This implementation approach was intended to underpin and unify cultural reform efforts at the enterprise level, while also allowing Defence Groups and Services the flexibility to interpret, build on and apply the case for change in a way that best resonates within their context.

1.20 Local level implementation of the 2017–22 strategy is the responsibility of Defence’s Groups and Services. The three armed Services and 11 Defence Groups (listed in Box 4) are expected to leverage enterprise level initiatives as appropriate, and where gaps exist in their local environment, to scope, develop and implement initiatives tailored to their context. Each of the three military services has developed complementary cultural strategies, which preceded the second strategy and have been refreshed over time. Individual Defence groups have also developed group specific cultural plans, which often form part of wider business change plans.

Note a: Defence advised the ANAO that the Vice Chief of the Defence Force Executive is treated as a group in Defence for administrative purposes.

Note b: The Strategy, Policy and Industry Group was established on 1 September 2020, replacing the Strategic Policy and Intelligence Group.

Note c: The Defence Intelligence Group was established on 1 September 2020 and was not expected to be a fully operational group until January 2021.

Source: ANAO analysis of Department of Defence documentation.

1.21 The strategy outlines that Defence People Group (DPG) ‘will continue as the policy lead for organisational level cultural reform initiatives, as well as facilitating, monitoring and reporting on the implementation of cultural reform within Defence’.

Role of the Defence Force Ombudsman

1.22 The Commonwealth Ombudsman is responsible for providing assurance that Australian Government entities and prescribed private sector organisations are acting with integrity and treating people fairly. The Ombudsman Act 1976 establishes specific Ombudsman roles to be performed by the Commonwealth Ombudsman, one of which is the Defence Force Ombudsman.²³ Since 1 December 2016, the Ombudsman’s role has included receiving, assessing and responding to reports of serious abuse which occurred while people were members of the ADF.²⁴ In response to reports of ‘the most serious forms of abuse and/or sexual assault’²⁵ which occurred before 30 June 2014, the Ombudsman can recommend that Defence make a reparation payment.²⁶

1.23 Between 1 December 2016 and 30 June 2020, 1,601 reports of abuse were received by the Ombudsman.²⁷ Of these, four per cent related to abuse alleged to have occurred after 30 June 2014. A summary of Ombudsman data on the number of incidences of abuse reported during the period 1 December 2016 to 1 April 2021 is set out below in Table 1.1.

Table 1.1: Summary of incidents of abuse reported to Ombudsman — 1 December 2016 to 1 April 2021

Note a: A complainant (person making the report of abuse) can report more than one incident within a single report, and these incidents may have occurred over the duration of their service.

Note b: In-jurisdiction data is captured in relation to reports rather than incidents. Therefore these figures include all incidences where the report has been listed both ‘in jurisdiction’ and ‘partial jurisdiction’.

Note c: The complainant’s service was not included or had nominated a service other than Army, Navy, RAAF or Reserves.

Source: ANAO analysis of Commonwealth Ombudsman data.

Rationale for undertaking the audit

1.24 Defence is now three years into its second five-year (2017–22) strategy of cultural and behavioural reform, and has recently launched further cultural reform initiatives through its: 27 November 2020 Defence Transformation Strategy; and ongoing response to the Inspector-General of the Australian Defence Force Afghanistan Inquiry Report released publicly on 19 November 2020.

1.25 This audit provides the Parliament with independent assurance on the effectiveness to date of Defence’s implementation of its second cultural reform strategy (2017–22). The ANAO has not previously audited Defence’s cultural reform strategy launched in 2012, but has reported on implementation of the related enterprise-level reform initiative, the Defence First Principles Review.²⁸ This audit was identified as a priority of the Parliament’s Joint Committee of Public Accounts and Audit (JCPAA) in the context of the ANAO’s 2020–21 Annual Audit Work Program.

Audit approach

Audit objective, criteria and scope

1.26 The objective of the audit was to assess the effectiveness to date of Defence’s implementation of its Pathway to Change — Evolving Defence Culture 2017–2022 cultural reform strategy.

1.27 To form a conclusion against the audit objective, the following high level criteria were adopted:

• Was Defence’s development of the strategy evidence-based?
• Did Defence undertake effective planning to support its implementation of the strategy?
• Did Defence effectively promulgate the strategy and its expectations regarding implementation?
• Did Defence establish fit-for-purpose governance arrangements to oversight implementation of the strategy?
• Has Defence established effective monitoring and reporting arrangements for the strategy?
• Can Defence demonstrate that intended outcomes are being achieved through its implementation of the strategy?

1.28 The scope of this audit is Defence’s implementation of its second (2017–22) cultural reform strategy. The implementation of the first strategy was not examined in detail, however the audit did consider whether Defence’s experience of implementing the first strategy informed the development of the second strategy.

1.29 Defence’s implementation of its November 2020 Transformation Strategy and response to the November 2020 Inspector-General of the Australian Defence Force Afghanistan Inquiry Report were at a relatively early stage at the time of this audit and have not been examined in any detail in this report. However, the connections between the various reform strategies have been considered, given their core focus on cultural and behavioural reform in Defence.

Audit methodology

1.30 The audit involved:

• reviewing relevant Defence documentation including the evidence base used to inform the development of the 2017–22 strategy and the planning and instructional material developed to support implementation of the strategy;
• reviewing governance and reporting arrangements to support implementation of the strategy;
• correspondence with Defence’s 11 group heads and three service chiefs, seeking written representations of their implementation of the 2017–22 strategy²⁹; and
• discussions with Defence officials involved in the implementation and delivery of the 2017–22 strategy, including the Deputy Secretary, Defence People Group.

1.31 The audit was conducted in accordance with ANAO auditing standards, at a cost to the ANAO of approximately $458,000.

1.32 The team members for this audit were Tara Rutter, Mellisa Wonson Leo Simoens, Megan Beven and Sally Ramsey.

2.1 As discussed in paragraph 1.2, the Pathway to Change: Evolving Defence Culture 2017–22 strategy was, in effect, the second phase of a cultural and behavioural change program initiated in 2012.³⁰ Defence commenced developing the second strategy in conjunction with delivery of its original 2012–17 strategy, Pathway to Change: Evolving Defence Culture — A Strategy for Cultural Change and Reinforcement.³¹

2.2 To assess the effectiveness of Defence’s implementation of Pathway to Change: Evolving Defence Culture 2017–22 (the second strategy) to date, the ANAO examined whether:

• the development of the strategy was evidence based; and
• Defence undertook effective planning to support its implementation of the strategy.

2.3 Appendix 3 sets out key steps in the development of the second strategy.

Was Defence’s development of the strategy evidence based?

2.4 A briefing paper provided to an extraordinary joint meeting of the Chiefs of Service Committee and the Defence Civilian Committee (joint committee meeting) held on 26 June 2017 recommended the endorsement by Defence senior leaders of the six cultural priorities for 2017–22, the Defence Cultural Intent Statement 2017–22 and the draft Pathway to Change: Evolving Defence Culture 2017–22 document.³² In the briefing paper, the Deputy Secretary Defence People advised that:

To reflect on how effective Pathway to Change: Evolving Defence Culture [the 2012–17 strategy] has been, and to inform the next phase of Defence’s cultural reform, a deliberate and significant Defence-wide consultation effort occurred between May and November 2016. More than half of the Defence workforce participated in this conversation.

… Based on consultation feedback, a refreshed statement of cultural intent, including six priorities for future cultural reform focus, have been developed and further tested across Defence.

2.5 Further, the briefing paper recommended that Defence senior leaders:

Note the next iteration of Defence’s cultural reform was informed by the Defence-wide conversation held in 2016.

2.6 The recorded outcomes of the meeting noted that:

The committee were advised that there had been many improvements in Defence culture since the 2012–17 strategy, however there was more work to be done, with specific focus on the areas of unacceptable behaviour and leadership and accountability.

2.7 Defence advised the ANAO that a range of data sources were reviewed as part of the second strategy’s development, including organisational survey data, diversity data, workforce well-being data, and performance appraisal data. Defence further advised that work undertaken as part of its collaboration with the Australian Human Rights Commission was used to compare its understanding of Defence data to develop the cultural priorities and cultural intent statement.³³ The second strategy notes that collaboration with the Commission ‘has been important in monitoring these cultural change efforts, and making recommendations on how to further improve and overcome impediments to reform.’³⁴ The briefing paper provided to the joint committee did not specifically outline how data was used to inform the development of the strategy and Defence was unable to provide evidence to the ANAO, such as working or analytical papers, that demonstrated how these data sources were drawn on to inform its development of the strategy.

Consultation with Defence personnel

2.8 To collect input from its personnel, Defence undertook a series of engagement activities between May 2016 and May 2017. The purpose of the consultation activities was to collect data and then test and validate the data collected. Defence People Group was asked by the Secretary of Defence and the Chief of the Defence Force (CDF) to collect input from both Australian Defence Force (ADF) and Australian Public Service (APS) personnel across all Groups and Services to inform ‘a deeper understanding across the organisation of how culture change efforts should develop’.

2.9 The output to be delivered from the consultation was:

… an analysis that provides:

• The key dimensions of culture and change that could underpin the next phase of Pathway to Change,
• The differentiation between proxy (surface) versus core indictors of culture, and
• Evidence based decision support for the SLG/EBC [Senior Leadership Group/Enterprise Business Committee].

2.10 The engagement activities conducted by Defence included:

• three workshops with the Senior Leadership Group (SLG), held in May 2016, November 2016 and March 2017.³⁵ The timing of these workshops enabled consultation on the approach to the second strategy and to build on feedback from other consultation activities;
• an interview with culture reform advisors in June 2016. This was an existing network of ADF 05 rank/APS Executive Level 1 and ADF 06 rank/APS Executive Level 2 representatives from all Defence Groups and Services³⁶, who were interviewed ‘to gain insights into current and future activities and end user requirements relating to culture data’;
• workshops led by ADF One Star and APS Senior Executive Service (SES) Band One personnel with their branches, in the form of ‘command led conversations’ across September and October 2016 and April and May 2017³⁷; and
• a two-day forum for 138 ADF Colonel/APS Executive Level 2 personnel in November 2016.³⁸

2.11 The conversation-led approach to developing the second strategy differed from that undertaken for the first strategy. While the first strategy reflected the recommendations and actions from a series of reviews³⁹ undertaken in response to incidents, Defence advised the ANAO that the second strategy ‘takes a holistic view of the cultural focus required in Defence, rather than being prompted by a particular incident’. In this context, Defence states in the second strategy that it was intended to move ‘from the implementation of actions and recommendations of Pathway to Change 2012–2017, to more deeply embedding positive workplace norms’, by building on the achievements of the first strategy and developing new drivers for the second strategy.⁴⁰

2.12 Defence engaged an external consultancy in 2016⁴¹, at a cost of $250,140, to assist with the staff consultation activities and to interpret the data collected. Defence was provided with two reports on the engagement activities and analysis of the data collected. The first report collated the data into priorities for cultural reform. The second report set out recommendations for refreshing the cultural intent statement, implementation considerations and an evidence base for evaluating the next phase of cultural reform.

2.13 As well as areas of cultural priority, the consultation process identified lessons learned from the implementation of the first strategy. Defence documentation states that:

• the first strategy was seen as a response to negative incidents of behaviour;
• the direct link between the first strategy and cultural change was not always apparent or supported by participants in the consultations;
• there was widespread knowledge of the priorities for Defence and the notable achievements from the implementation of the key actions and recommendations from the first strategy, although evidence of ‘deep and tangible cultural change was lacking in the conversation responses’. It was noted that this may be related to implementation issues, reducing the impact of change;
• while there had been progress made during the first strategy, there were areas where improvement was still needed, for example in respect to unacceptable behaviour; and
• demonstrable change was seen in the areas where Defence had invested most effort in communicating its expected standards of behaviour, in particular in Defence’s training establishments where initiatives have resulted in a reduction of incidents of unacceptable behaviour.

2.14 Defence advised the ANAO that while it did not compile a consolidated list of lessons learned from the first strategy, a number of activities contributed to its understanding of lessons learned. These included the Defence-wide consultation activities (discussed above) and collaboration activities with the Australian Human Right Commission.

2.15 Barriers and enablers to cultural and behavioural reform were also identified through the consultation activities. The identified barriers included: the differentiated identities across Defence (for example uniformed and non-uniformed personnel); where individuals identified with more than one set of values such as ADF values and Army or Navy or Air Force values; and existing performance management systems.⁴² Enablers of cultural and behavioural reform were identified as: the recognition of positive achievements; and the provision of education not just training.

Survey data

2.16 Defence documentation indicates that during the first cultural reform strategy Defence had regularly surveyed Defence personnel about aspects of its organisational climate. For example, in a brief to the Deputy Secretary Defence People dated 31 January 2014, the Workforce Planning Branch cited the following sources as indicators of culture and cultural change within Defence:

• YourSay Organisational Climate surveys from February 2013, May 2013, October 2013 and February 2014⁴³;
• the 2014 Whole of Defence Unacceptable Behaviour Survey, which was emailed to a random sample of 25 per cent of the ADF and APS workforce (participation was voluntary, with a 45 per cent response rate); and
• YourSay Organisational Climate group results from the February 2016 survey from all Groups and Services.

2.17 A year after the first strategy’s release, in a Senior Leader Covering Brief on ‘People Change and Efficiency’, Defence People Group advised its senior leadership⁴⁴ that:

Pathway to Change is primarily monitored through the YourSay Organisational Climate survey. Since May 2013, the YourSay Organisational Climate survey has included a set of survey questions designed to capture information on the awareness and adoption of Pathway to Change. The items in the YourSay survey relating to cultural reform programs were designed on the premise that cultural change occurs in a relatively linear direction (contact – awareness – understanding – positive perception – adoption – embedding – internalisation (commitment)). As a reflection of this, levels of awareness and understanding are often higher than levels of embedding and internalisation.

2.18 Defence had access to staff survey data which it used to monitor implementation of the first strategy. However, Defence could not demonstrate that it made full use of available staff survey data to strengthen the evidence base, focus, and decision-making for the second strategy. Utilising available survey data to identify potential areas of focus (for example, parts of Defence where awareness and adoption was lower or where the cultural effect expected from the first strategy had or had not been achieved) would have strengthened the evidence base used to develop the second strategy, and better informed Defence’s decision-making.

2.19 Further, Defence did not make full use of available staff survey data to establish a baseline measure of culture to help assess the outcomes of the second strategy and to support improvements in culture (as outlined below). For example, the development of a baseline would have helped Defence assess progress on work-related unacceptable behaviours, which the second strategy identified as an ongoing area of concern:

While there has been a decrease in the number of complaints, work-related unacceptable behaviours, particularly bullying and discrimination, continue to be the most common types experienced in the workplace and satisfaction and confidence with the complaint process remains an area of concern. Women continue to experience unacceptable behaviour at higher rates than male counterparts and females are twice as likely to experience sexual-related unacceptable behaviour.^{45, 46}

2.20 Defence advised the ANAO in January 2021 that a baseline measure of culture was not developed as a result of the 2011 reviews, as the second strategy marked an attempt to better define what Defence was seeking to move towards, rather than keeping focus on what it was moving away from. Defence further advised that this approach was deliberate, and was designed to drive wider positive engagement with culture change with clearer links to capability.

2.21 In January 2021 Defence advised the ANAO that it does not currently undertake trend analysis of types of unacceptable behaviour.⁴⁷ Defence further advised in April 2021 that:

Defence does not currently analyse unacceptable behaviour category trends in relation to unacceptable behaviour reported in complaints and incident management systems.

Three year trend data on unacceptable behaviour type is, however, captured through the Workplace Behaviours Survey, which asks respondents how little or how much unacceptable behaviour they have witnessed or experienced in Defence workplaces.

2.22 Defence also advised that a number of reform activities are being undertaken to increase the capture of data and to strengthen data analysis.

Evaluation of the first strategy

2.23 Defence did not undertake an evaluation⁴⁸ of the first strategy to inform the development of the second. Defence advised the ANAO that this was due in part to the first strategy containing a number of recommendations and key actions that were tracked for implementation purposes.⁴⁹

2.24 The decision not to conduct an evaluation was a missed opportunity to establish the extent to which Defence’s desired behavioural and cultural reforms had been achieved and to identify and address ongoing risks to their achievement.

Did Defence undertake effective planning to support its implementation of the strategy?

2.25 Effective planning for strategy implementation considers how processes and activities are to contribute to intended outcomes, establishes a performance framework to support monitoring, reporting and evaluation, and identifies how risks to successful implementation will be managed.⁵⁰

Advice regarding the implementation approach for the 2017–22 strategy

2.26 The paper provided to the joint committee meeting of senior leaders held on 26 June 2017 (discussed in paragraphs 2.4–2.7) set out the general implementation approach for the second strategy. Senior leaders were advised of Defence People Group’s intention to implement the second strategy through a devolved ‘business as usual’ approach:

Cultural reform is an enduring piece of work for Defence, with implementation of Pathway to Change: Evolving Defence Culture 2017–2022 to be part of our business as usual. Defence People Group will continue as the policy lead for organisational level cultural reform initiatives, as well as facilitating, monitoring and reporting on the implementation of cultural reform in Defence. Groups and Services are expected to leverage organisational level initiatives as appropriate, and where required, to scope, develop and implement initiatives tailored to their context.

2.27 The agreed outcomes of the joint committee meeting were that:

The committee:

• endorsed the development of an evaluation framework for Pathway to Change: Evolving Defence Culture 2017–22;
• noted that Defence People Group will lead an organisational-wide qualitative research program; and
• noted strategic oversight of Pathway to Change: Evolving Defence Culture 2017–22 will be undertaken by the Enterprise Business Committee.⁵¹

2.28 The paper advised senior leaders that the second strategy was intended to ‘provide a One Defence policy for driving, information and reinforcing cultural change’.

Planning to support implementation

2.29 The roles and responsibilities of Defence People Group, the other Groups and Services, and Defence’s Enterprise Business Committee were articulated in the second strategy at a high level. The role of the Enterprise Business Committee was to provide strategic oversight⁵², and a combined approach to implementation was relied on, involving both the centre and line functions:

• Defence People Group (the centre) facilitating, monitoring and reporting on the implementation of cultural reform.
• Groups and Services (the line functions) incorporating the six cultural priorities into their business plans, leveraging on enterprise level initiatives as appropriate to deliver cultural reform and developing their own initiatives where gaps existed.

2.30 A June 2017 report on the staff consultation process (discussed above) and analysis for the second strategy recommended that ‘Defence People Group develop an implementation plan … that acknowledges the identified priorities and implementation considerations’. Defence People Group did not develop an implementation plan or other planning documentation to indicate how it intended to facilitate the implementation of cultural and behavioural reform under the second strategy.

2.31 An impact of the lack of an implementation plan was set out in an internal report prepared for Defence in June 2020. The report observed that the second strategy had a devolved implementation model and noted that ‘however the accountabilities and responsibilities are described at such a high level that they do not provide sufficient clarity to support implementation and management of the program’. The report also noted that:

… this second stage of Pathway [to Change] has retained some of the reform language of the first stage but with the broadening of its scope and introduction of a devolved model which does not clearly define responsibilities and accountabilities. It has lost its focus and has not set specific targets or milestones that define what changes or reforms are being sought.

2.32 The second strategy stated that cultural reform progress would be evaluated as part of Defence’s regular enterprise performance reviews, with strategic oversight undertaken by the Enterprise Business Committee.⁵³ It was expected that Service and Group Business Plans, and the accompanying bi-annual Performance Reports which feed into this cycle, would include the six cultural reform priorities for 2017–22.⁵⁴ An evaluation framework, to undertake in-depth assessments of each cultural priority, was also developed. In the context of its implementation planning for the second strategy, Defence did not develop a measurement framework to monitor how culture had changed due to activities undertaken as part of the second strategy.⁵⁵

2.33 Defence People Group prepared a communications plan to support implementation of the second strategy. The communications plan is discussed further in Chapter 3.

2.34 Defence did not prepare a risk management plan to support its implementation of the second strategy.

2.35 Defence considers the second strategy to be a control for the enterprise-level risk: ‘People: Defence not having a workforce with the capability and capacity to meet required outcomes’. The enterprise control effectiveness rating was assessed as ‘partially effective’ as of October 2019 (Box 5 below). Prior to this the effectiveness of the control had not been assessed.

Note a: Defence documentation indicates that the rating remained unchanged as of March 2020.

Source: Department of Defence documentation.

Budget and implementation costs

2.36 Implementation costs for the second strategy were to be met from within existing Group and Service budgets.

2.37 The paper submitted to the joint committee meeting of senior leaders held on 26 June 2017 (discussed in paragraphs 2.4–2.7) stated that Defence People Group would meet the cost of a number of related activities:

Defence People Group will refresh the branding and develop associated products in support of Pathway to Change: Evolving Defence Culture 2017–2022. The cost of producing these products will be funded by Defence People Group during 2017–18.

2.38 Defence advised the ANAO that estimated staffing costs for the One Defence Culture team⁵⁶ in Defence People Group are approximately $1.95 million since 2016–17 (see Table 2.1 below).⁵⁷ Defence further advised that it was unable to calculate the cost of implementing the strategy at the Group and Service level, ‘as Groups and Services absorb the costs of specific or targeted local level delivery within existing budgets’.⁵⁸

Table 2.1: One Defence Culture Team estimated staff costs since 2016–17 for the 2017–22 strategy^a

Note a: Defence has provided an estimate of the total remuneration costs of the team attributable to the strategy.

Note b: This figure is to 31 December 2020.

Source: Defence documentation.

2.39 Defence advised the ANAO in September 2020 that it had entered into contracts with external consultants to the value of $2.19 million, as part of developing and implementing the strategy (see Table 2.2 below). Defence further advised that actual expenditure to date under the contracts listed in Table 2.2 was $1,906,251 (as at January 2021).

Table 2.2: Value of contracts — external consultants and contractors for the 2017–22 strategy — May 2016 to December 2020

Source: Defence documentation.

2.40 In addition to the external consultants employed by Defence to work on the second strategy, a Memorandum of Understanding (MOU) with the Australian Human Rights Commission (AHRC) was entered into.⁵⁹ The contracted value of work set out in the MOU is $7.1 million (Table 2.3). Defence advised the ANAO in January 2021 that actual expenditure to date under the contract has been approximately $5.95 million (excluding GST).⁶⁰

Table 2.3: Contract value of work undertaken by the AHRC

Source: Department of Defence documentation.

3.1 To assess the effectiveness of Defence’s delivery of Pathway to Change: Evolving Defence Culture 2017–22 (the second strategy) to date, the ANAO examined whether Defence:

• effectively promulgated the strategy and Defence’s expectations regarding implementation; and
• established fit-for-purpose governance arrangements to oversight implementation of the strategy.

Did Defence effectively promulgate the strategy and its expectations regarding implementation?

Communication of the strategy

3.2 The second strategy was launched on 20 November 2017 by the Secretary of Defence and the Chief of the Defence Force (CDF).

3.3 In mid-2017, a communication plan was approved by the First Assistant Secretary People Policy and Culture.⁶¹ The aim of the plan was ‘to launch and promote awareness’ of the second strategy.⁶² The communication plan set out: key messages; a communication aim and objectives; target audiences; stakeholders; risks and sensitivities; budget information; and measures for evaluating the communication plan.⁶³

3.4 The communication objectives outlined in the plan were to:

• launch and promote awareness of the strategy to the entire Defence workforce, including the approach, progress and benefits of achieving the strategy and its desired end state;
• highlight the successes and progress of cultural reform within Defence since Pathway to Change — Evolving Defence Culture (the 2012–17 strategy, or first strategy) was released;
• encourage and promote the One Defence Leadership Behaviours; and
• reinforce Defence’s commitment to cultural change.

3.5 The communication plan outlined 13 key messages to be communicated to Defence personnel, through a variety of communication channels. The key messages included: the evolution of the Pathway to Change strategy; organisational achievements⁶⁴ since the release of the 2012–17 strategy, while noting there was still more to be achieved; the refreshed statement of cultural intent and the six cultural priorities; the focus of cultural reform shifting to an environment where leaders were accountable for creating a more positive culture; the strategy recognising and promoting a high performing culture as a key enabler of Defence capability; and the One Defence Leadership Behaviours.

3.6 The ANAO reviewed the key communications issued by Defence following the second strategy’s release. These communications included: email to senior leaders, email to Defence APS personnel from the Secretary and CDF, DEFGRAM⁶⁵, a signal from CDF to all ADF members⁶⁶, news articles in the Service newspapers in November 2017, posters, banners and content on the Defence intranet. The messaging in these communications was consistent with the communication objectives and key messaging.

3.7 In addition, the Minister for Defence sent an email on 27 November 2017 to all Defence APS personnel. This email expressed the Minister’s thanks to staff for their contribution towards building a stronger culture in Defence during the past five years, and commented that while good progress had been made, there was still more that could be done to make the organisation better. The email also stated that individuals: needed to be accountable for their actions and work together so as to develop and retain a high performing and inclusive culture; and should consider what they could do to make a difference to the culture within their workplaces and the organisation.

Communications to senior leaders

3.8 Specific arrangements were made to inform Defence senior leaders⁶⁷ of their role in implementing the strategy. The arrangements included a presentation on 17 November 2017 to the senior leadership group which outlined their responsibilities. In addition senior leaders were sent an advisory minute from the Deputy Secretary Defence People Group on 27 November 2017 and a Senior Leaders Support Package.

3.9 The minute from the Deputy Secretary Defence People Group outlined that, to ensure the successful implementation of the strategy, it was important for all senior leaders to understand and appreciate the role of cultural reform in strengthening capability and maintaining the trust of Government, the community and colleagues, as well as being accountable for building an inclusive workplace culture to support staff to contribute to deliver on Defence’s mission. The minute further outlined that Defence was:

… seeking your support to promote and champion Pathway to Change: Evolving Defence Culture 2017–2022 in your local areas. This involves you leading by example and can include but is not limited to:

• creating a common understanding amongst your people of the need for ongoing cultural reform within Defence;
• developing a strong understanding of our cultural intent moving forward and the six priorities;
• facilitating regular, meaningful conversations with your people that lead to identifying and implementing relevant actions that empower individuals and teams to achieve our cultural reform goals;
• assisting your people to understand the connection with the One Defence Leadership Behaviours and how they contribute to a high performance culture; and
• monitoring, measuring and reporting on activities and improved outcomes.⁶⁸

3.10 The Senior Leaders Support Package included: the strategy document; the Cultural Advisory Network contacts; promotional material (such as lanyard cards, posters, articles in Service newspapers and banners); and a slide pack which included talking points and conversation starters to facilitate local level conversations. The joint meeting of the Chiefs of Service Committee and the Defence Civilian Committee held on 26 June 2017 (discussed a paragraphs 2.4–2.6) had agreed that ‘Command/Branch led conversations be used to promulgate information on the next iteration of Defence’s cultural reform’.

3.11 These communication activities were intended to ensure senior leaders were informed of Defence’s expectations of them in implementing the second strategy, and Defence provided a range of supporting resources. Given the importance of local level conversations in the context of the devolved implementation approach — to build a common understanding, reinforce personal accountabilities and empower individuals — there would have been merit in Defence People Group putting arrangements in place to ensure that the requirement for local level conversations at Command/Branch level was complied with. Defence advised the ANAO that there were no mechanisms in place at the enterprise level for reporting on the conduct of these conversations. Defence further advised that its aim was to ‘empower our people to have the conversations and demonstrate the cultural reform priority of Leadership Accountability’ and that enterprise level reporting on these conversations would have ‘demonstrated a lack of trust’.

Communicating the intended role of the strategy

3.12 Defence advised the ANAO in September 2020 that it considers the second strategy to be an ‘umbrella strategy’ — that is, it encompasses all Defence’s human resources policies, programs and activities.⁶⁹ In January 2021, Defence further advised the ANAO that:

Defence often refers to Pathway to Change 2017–22 as an umbrella strategy in order to convey that (i) it provides the overarching policy position for culture in Defence, and (ii) that the scope of activity that sits under it is significant, encompassing initiatives at the enterprise level, as well as the many lines of effort delivered by the Groups and Services. The terminology, however, tends not to be used in written communication.

3.13 The communication plan stated that:

The aim of Pathway to Change: Evolving Defence Culture 2017–22 is for the cultural intent statement and six priorities to underpin and unify cultural reform efforts across Defence.

3.14 Inclusion of the six priorities in the business plans of Groups and Services was to be the key mechanism for achieving a unified focus on cultural reform across Defence. The briefing paper provided to the June 2017 joint committee meeting (discussed in paragraph 3.10) stated that the cultural intent statement and the six cultural priorities were ‘intended to be accessible to all Defence personnel’, from junior ranks/officials to the Senior Leadership Group. The briefing paper also stated that the strategy document:

… is the more comprehensive, explanatory document, which provides the bridge from the original Pathway to Change: Evolving Defence Culture, and the Behaviours Stream of First Principles Review, to the future. This document is for leaders to use in implementing cultural improvement within their Service, Group and whole of Defence environment, and provides a sustainable approach to embedding the changes recommended by First Principles Review.⁷⁰

3.15 The communications and advice provided to Defence personnel and senior leaders provided limited information on how the second strategy related to their legal and ethical obligations or other policies, programs or activities within Defence. While the strategy document sets out the high level vision under each priority, there is limited or no detail on the: actual activities that Defence personnel could expect to see established or emphasised as part of the strategy’s implementation; or the goals or targets that would demonstrate success in establishing and embedding the desired culture.⁷¹ For example, in respect to the ‘leadership accountability’ priority, the strategy document outlines that Defence will:

… strengthen leadership capability so that our leaders are confident in their ability to empower their people, are able to seek out and use alternative ways of thinking, and are more skilled and active in managing the behaviour and performance of their teams. We will strengthen individual and organisational accountability through effective performance management by—and of—our leadership. We will expect our leaders to be more conscious of their own areas for personal and professional growth, of the need to learn from their own performance and that of their teams, and of the importance of giving and receiving feedback.⁷²

3.16 While the statement includes some high level objectives relating to this priority area, it does not state what types of supporting activities would be undertaken at the enterprise level to help Groups and Services implement activities to realise these objectives — other than ‘through effective performance management’ — or to determine the success of that activity in helping achieve reform. Defence advised the ANAO that:

The strategy document includes a number of high level objectives and guiding information about how each cultural priority would be applied in the workplace. Groups and Services designed activities to meet their contextual requirements.

3.17 Similarly, in respect to the ‘capability through inclusion’ priority, the strategy document includes a number of high level objectives, but limited detail on relevant supporting activities or how Defence planned to measure the contribution of the identified activities in achieving reform. The strategy document states that:

To achieve a more inclusive and capable organisation, we will foster work practices which enable men and women, people of different cultural backgrounds, sexual orientation, and those with a disability to contribute to their best potential, We will provide greater education on how respect for individual differences and more inclusive approaches improve Defence and team performance. We will further the representation of women, Indigenous Australians and people from culturally diverse backgrounds, and increase employment opportunities for people with disabilities. We will measure our success by setting recruitment targets, and through examining the effect of our retention and career progression measures and our more inclusive workplace practices. We will expect our leaders to role model the behaviour that reflects an inclusive workplace.⁷³

3.18 In April 2021, Defence advised the ANAO that:

Group Heads and Service Chiefs had accountability for implementing Pathway to Change 2017–22. The approach allowed for implementation to take shape in Groups and Services through activities that delivered on the intent within contextual requirements for each organisation. As such, it was not appropriate nor possible to include extensive detail of activities within the strategy document.

Evaluation of the initial communication of the strategy

3.19 Defence’s 2017 communication plan contained measures to evaluate the success of the communications plan. These measures were: the number of ‘hits’ to the strategy’s internet and intranet websites; and analysing media coverage of the strategy for positive, negative and neutral messaging.

3.20 Defence did not evaluate the effectiveness of its communications for the strategy. In January 2021, Defence advised the ANAO that ‘no evidence can be found that indicates that an evaluation was completed, the impact of the communications plan was gauged through conversations at the Cultural Reform Advisory Network’ (CRAN). Defence further advised that:

CRAN conversations relating to the communications plan focused on products available, activities underway and adjustments made in response to feedback received. Meetings minutes do not capture all details of these discussions’.

3.21 Defence advised the ANAO that in addition to the CRAN, information on the impact of the communication plan was gauged through various mechanisms such as: meetings with personnel involved in cultural reform from the Services and HR Business Partners; reviewing evaluations from relevant training courses; and participating in local level cultural steering group meetings.

3.22 An internal discussion paper on early findings from implementation of the second strategy was prepared for the Assistant Secretary Culture and People Development in June 2019 (nineteen months after the strategy was launched). Defence advised the ANAO that the paper was prepared for the purpose of ‘identifying opportunities and generating discussion on continuous improvement methods and next steps … [and] included improving communication about the priorities within Pathway to Change 2017–22’. Defence further advised that:

This paper was a catalyst for moving focus to embedding efforts in measurement, creating support tools and strengthening alignment of business plans to the cultural reform priorities. It also established the focus of the communication for the Defence Values and Behaviours.

3.23 The discussion paper stated that:

• due to the large number of activities (over 400, undertaken as part of the 2019 mapping exercise) being attributed to the six cultural priorities, there was a risk of the overall cultural reform messaging being diluted;
• personnel understood that the strategy was important, ‘but they do not necessarily attribute it to organisational change’;
• discussions with Directors (EL2s) and their teams across DPG indicated that people considered the strategy was at an enterprise level, with the focus on processes and systems, and did not know what the strategy meant for them as an individual; and
• there was confusion among employees, with each Group and Service having its own set of cultural priorities. Additionally, the six cultural priorities in the strategy identified several outcomes they intended to achieve, making it difficult to determine where to focus, and that the messaging of cultural priorities should be that ‘they provide a common cultural goal or higher purpose that aids the various cultures to work together effectively and efficiently to achieve organisational capability’.

Ongoing communication of the strategy

3.24 In June 2018, seven months after the second strategy’s launch⁷⁴, an additional communication plan was prepared for the period June to November 2018, with the aim of promoting awareness and understanding of the strategy amongst Defence personnel and increasing the number of effective initiatives implemented during the strategy’s first year.⁷⁵ Defence advised the ANAO that this communication plan was never formally endorsed, as communication for the strategy became part of business as usual activities and the activities identified within the plan were implemented.

Guidance and templates to support strategy implementation

3.25 To support strategy implementation by Defence personnel, Defence People Group established an intranet page which sets out:

• information on the strategy’s release;
• the six cultural reform priorities;
• the role of Defence People Group in the strategy as the policy lead for enterprise level cultural reform initiatives and facilitating, monitoring and reporting on the implementation of cultural reform;
• reporting and oversight arrangements for the strategy;
• the history of Pathway to Change and the history of reviews of aspects of Defence’s culture; and
• a dedicated Pathway to Change mailbox for queries.

3.26 The culture resources and support tools intranet page provides information on:

• Defence Values and Behaviours, including a conversation pack to support leaders to have discussions with units/teams on values and behaviours.
• Culture plans, including why a culture plan is required, principles and ‘hints and tips’ to consider when developing a culture plan, and advice that each Group and Service should have a culture plan that captures their current cultural reform focus and a commitment to action. The plan should link back to the strategy and six cultural priorities, and be reviewed as part of the annual Group/Service business planning process.
• Assessment tools were released at the end of June 2020 to assist Groups and Services to develop and review a culture plan. An example culture plan template is also included, however use of the template is not mandated.
• Departmental policy and guidance, programs and initiatives, employee networks, training and education resources, intranet resources and contact areas for each of the six cultural priorities.

Mandatory training for Defence staff

3.27 All Defence personnel (APS and ADF), both new starters and ongoing staff, are required to complete a number of mandatory training courses to ensure they are aware of, and remain aware of, key requirements for working in Defence.⁷⁶ The Workplace Behaviour Mandatory Awareness training course covers:

• ethics and workplace behaviours, which are a cultural priority under the second strategy;
• values and behaviours;
• options for resolving unacceptable behaviour incidents or issues; and
• avenues for advice and support.

3.28 Defence advised the ANAO that this training must be completed annually⁷⁷, and that it is an individual’s responsibility to ensure they complete their mandatory training. For APS personnel, completion of mandatory training is a requirement of the annual performance assessment process and is reviewed on an annual basis, with supervisors required to confirm that training has been completed. For ADF personnel, the services are required to maintain the currency of mandatory training as part of their Individual Readiness requirements, with commanders responsible for ensuring training is completed.

Did Defence establish fit-for-purpose governance arrangements to oversight implementation of the strategy?

Enterprise Business Committee

3.29 The 2017–22 strategy states that the Enterprise Business Committee has responsibility for strategic oversight:

Cultural reform progress will be evaluated as part of Defence’s regular enterprise performance reviews, with strategic oversight undertaken by the Enterprise Business Committee. Service and Group Business Plans, and the accompanying bi-annual Performance Reports which feed in to this cycle, will include the six cultural reform priorities for 2017–2022.⁷⁸

3.30 Defence’s 2017–18 annual report indicated that at 30 June 2018, the Associate Secretary chaired the Enterprise Business Committee, which was ‘responsible for ensuring the effective running of Defence. Its remit includes corporate planning, performance monitoring and reporting, enterprise risk management, information management and service delivery reform’.⁷⁹

3.31 Assigning strategic oversight to the Enterprise Business Committee was commensurate with the enterprise-level focus of the 2017–22 strategy.

3.32 Reporting to the committee is discussed in chapter 4 of this audit.

Defence People Group

3.33 The 2017–22 strategy states that:

Defence People Group will continue as the policy lead for organisational level cultural reform initiatives, as well as facilitating, monitoring and reporting on the implementation of cultural reform in Defence.⁸⁰

3.34 Defence People Group was expected to continue performing the role it had in respect to the earlier 2012–17 strategy.

3.35 The April 2017 Defence People Group Service Offer describes the services that the Group provides to the department. It notes that one of the four Group priorities is to drive, inform and reinforce cultural change. In relation to the second strategy, the service offer describes that Defence People Group will monitor, assess and report on the implementation of the strategy within Defence.⁸¹ The offer also outlines that the Group will support the embedding of the One Defence Leadership Behaviours to enable a culture where leadership, professionalism and corporate behaviour are valued and rewarded.

3.36 Defence People Group monitors implementation of the strategy through: its review of organisational survey results and culture plans (discussed in paragraphs 4.21 to 4.23); Group and Service level reporting prepared for the Enterprise Business Committee⁸²; and regular discussions with Defence Groups and Services.

3.37 As noted in chapter two, Defence People Group did not develop an implementation plan or other planning documentation to document how it intended to facilitate the implementation of cultural reform under the second strategy. For example, an approach was not developed to support the structured collection and collation of performance information from Defence Groups and Services about strategy implementation and impact. In the course of this audit, Defence was undertaking work to identify the initiatives that support the achievement of the second strategy and to establish a framework to assess impact. This work is discussed further in chapter 4.

Groups and Services

3.38 Implementation of the 2017–22 strategy was devolved to Groups and Services to implement through business as usual processes, in a way that was meaningful in their individual context:

Groups and Services are expected to leverage enterprise level initiatives as appropriate, and where gaps exist in their local environment, to scope, develop and implement initiatives tailored to their context.⁸³

3.39 Defence established a requirement that Group and Service business plans would include the six cultural reform priorities.⁸⁴ The strategy states that:

Service and Group Business Plans, and the accompanying bi-annual Performance Reports which feed in to this cycle, will include the six cultural reform priorities for 2017–2022.^{85, 86}

3.40 The ANAO examined Group and Service business plans for the period 2018–19 (the first business plan after the strategy was released) to 2020–21, to assess whether Groups and Services had included the priorities in their business plans as expected (see Table 3.1 below). The ANAO expected to see an explicit reference to the six cultural priorities in each plan, to address the policy requirement and to aid performance monitoring of planned activities.

3.41 Table 3.1 indicates that the majority of Defence’s Groups and Services did not include the cultural priorities in their business plans in a timely manner.

• Two of the 13 Groups and Services (15 per cent) included the six cultural priorities in their business plan in 2018–19 as required⁸⁷, with a further six Groups and Services (46 per cent) including references to the strategy or the cultural intent in their business plan.
• By 2020–21, only seven of the 13 Groups and Services (54 per cent) had met the requirement of the strategy by including the priorities in their business plan, with a further four Groups and Services (31 per cent) including references to the strategy or the cultural intent in their business plan.

3.42 In 2018–19, 12 of the 13 Groups and Services (92 per cent) included culture related performance measures in their business plans, with 10 of the 13 Groups and Services (77 per cent) including culture related performance measures in 2020–21.

3.43 Defence People Group did not follow up to ensure that Groups and Services had embedded the strategy into business plans as required in a timely manner until February 2020, despite being responsible for facilitation, monitoring and reporting. Defence advised the ANAO in January 2021 that:

Recognising that not all Groups and Services had embedded Pathway to Change 2017–22 into business plans, Defence People Group created an activity under Defence 2022; a Defence Reform program, to encourage Group and Services to incorporate the cultural priorities as part of business planning process. As part of this the Defence business plan templates were updated, intranet guidance strengthened and a plan established to audit business plans to better identify those areas that required additional support.

Governance relating to leadership capability

3.44 The 2017–22 strategy stated that:

To maximise our capability, sustain the trust of Government, the Australian community and each other we must take the best in our culture forward, and hold to account those who do not meet our standards. This means building on our recent progress in creating a more inclusive culture to drive high performance. It means strengthening our professionalism, our accountability, and leadership at all levels (p. 6).

…

We will strengthen leadership capability so that our leaders are confident in their ability to empower their people, are able to seek out and use alternative ways of thinking, and are more skilled and active in managing the behaviour and performance of their teams. We will strengthen individual and organisational accountability through effective performance management by—and of—our leadership. We will expect our leaders to be more conscious of their own areas for personal and professional growth, of the need to learn from their own performance and that of their teams, and of the importance of giving and receiving feedback (p. 8).

3.45 Defence advised the ANAO that accountability for culture and behaviours is reinforced through: the One Defence Leadership Behaviours⁸⁸; senior leadership performance framework (role charters, performance appraisals, upward feedback, climate scans, and 360 degree feedback); APS and ADF performance frameworks; and corporate messaging.

Embedding senior leaders’ responsibilities into the performance framework

3.46 The July 2018 guidance document, A Guide to the Senior Executive Service Talent, Performance and Development Framework (the SES framework), stated that:

The Defence White Paper, the First Principles Review and Pathway to Change require Senior Executive Service (SES) with a focus on achieving an accountable capable and unified workforce with a strong performance culture at its core where leadership, professionalism and corporate behaviours are valued and rewarded.⁸⁹

3.47 The SES framework is used to set and assess the four key areas of performance and behaviour for SES officers.⁹⁰ The framework provides that SES officers are expected to model and promote the One Defence Leadership Behaviours⁹¹ at all times, and states that these behaviours support Defence’s values and cultural intent articulated in the second strategy. The SES framework applies to Defence’s (civilian) SES cohort.

3.48 Defence advised the ANAO that the performance framework for military star ranks is captured in the Individual Reporting and Star Planning processes. The Individual Reporting process provides information on star ranked officers’ performance and potential (including for assessment of suitability for promotion), and their contribution to Defence values, cultural change and Group and Defence Plans. The Star Planning process is used to: promote Officers into and within the star ranks; appoint individuals to positions; establish new positions; identify leadership and development opportunities; and facilitate the outflow of star ranks from Defence. In April 2021 Defence further advised the ANAO that the annual appraisal form will be modified to include specific reference to expectations and compliance with Defence Values and Behaviours :

Star Rank Officers in the ADF are required to participate in an annual performance appraisal and development reporting system in accordance with Military Personnel Policy Manual Par 5, Chapter 1. Defence form AC740 (Senior Officer Appraisal and Development Report) is the tool used for annual reporting. Part 1 of the form states an annual objective of each officer is to ‘Lead contribution to the key reform programs of Defence; provide high-quality and responsive support to the Ministers’ offices and senior committees in support of the CDF and Secretary; and demonstrate commitment consistent with the cultural change, diversity requirements and WHS legislative duties expected of Senior Officers of the ADF.’

Commitment to cultural change includes commitment to Defence Values and Behaviours. To amplify this, the annual appraisal form will be modified to include specific reference to expectations and compliance with Defence Values and Behaviours.

Role charters

3.49 All members of Defence’s Senior Leadership Group⁹² are required to develop and maintain a role charter to provide clarity about their accountabilities, responsibilities, deliverables, and expected behaviours. It is expected that role charters will align with Group and Service plans, the Defence Business Plan and the department’s Corporate Plan. Individual performance agreements for Group Heads and Service Chiefs identify the key expected results to be achieved during the performance cycle.

3.50 The ANAO’s review of role charters for Group Heads and Service Chiefs⁹³ indicated that responsibilities for implementing the strategy were not specifically included in role charters, with the exception of the role charter for the Deputy Secretary Defence People Group, which outlined an individual responsibility for the implementation of diversity and inclusion strategies, APS career management and evolving Defence culture under Pathway to Change (the strategy). This role charter also contained a key metric relating to the Deputy Secretary’s responsibilities for developing, driving, informing and reinforcing Defence culture.

3.51 The role charters reviewed by the ANAO referred to issues of culture as follows:

• All Australian Public Service (APS) SES role charters set out the One Defence Leadership Behaviours and a shared accountability for implementing the First Principles Review intent and outcomes, including behavioural changes, workforce skills and diversity. The key leadership section of the SES role charter template is pre-populated with the One Defence Leadership Behaviours.⁹⁴
• The Service Chief role charters⁹⁵ include a responsibility for developing ADF leadership or service specific leadership that advances and embeds Defence values. The charters also note that duties and responsibilities should be carried out through effective leadership, and actions should be prudent, lawful, ethical and consistent with government policy and Defence values.

4.1 To assess the effectiveness of Defence’s implementation of Pathway to Change: Evolving Defence Culture 2017–22 (the second strategy) to date, the ANAO examined whether Defence:

• established effective monitoring and reporting arrangements for the strategy; and
• can demonstrate that intended outcomes are being achieved through its implementation of the strategy.

Has Defence established effective monitoring and reporting arrangements for the strategy?

4.2 Effective monitoring and reporting arrangements can provide senior leaders with insights and assurance on the effect of strategy activities on the culture of the Defence Enterprise and risks to success.

Biannual performance reporting to the Enterprise Business Committee

4.3 As discussed in paragraphs 3.29–3.31, the second strategy states that Defence’s Enterprise Business Committee (EBC) has responsibility for strategic oversight:

Cultural reform progress will be evaluated as part of Defence’s regular enterprise performance reviews, with strategic oversight undertaken by the Enterprise Business Committee. Service and Group Business Plans, and the accompanying bi-annual Performance Reports which feed in to this cycle, will include the six cultural reform priorities for 2017–2022.⁹⁶

4.4 The June 2017 joint committee meeting, which considered and endorsed the second strategy⁹⁷, was advised that:

Groups and Services will have an overhead in reporting on the implementation and progress of Group and Service level cultural reform. This overhead will be reduced, however, by incorporating cultural reform information within the established bi-annual Group and Service Performance Reports that are considered by the Enterprise Business Committee.

Ongoing evaluation will also have an overhead, although this should be balanced by having better data upon which to make investment decisions on programs and initiatives in support of reform. Groups and Services will be required to support, facilitate and encourage select segments of their workforce to participate in a qualitative research program, and to work with Defence People Group through the provision of information and data to inform best practice.

4.5 Bi-annual performance reports are provided to the EBC in March and November each year to support in-year monitoring of the performance of Groups and Services against their business plans.⁹⁸ Business plans connect the activities of Groups and Services to the activities in the Corporate Plan.

4.6 The bi-annual performance reporting process involves:

• A mandatory Performance Reporting Template being sent to Groups and Services (prior to the March and November reporting periods) to use to report against the enterprise performance measures or activities they are responsible for. The template has changed over time.⁹⁹ The template notes the Accountable Officer, a Responsible Officer¹⁰⁰, and a list of Contributors¹⁰¹ for each measure/activity. An accountability matrix is prepared to support Accountable and Responsible Officers to obtain the information needed to develop an informed assessment on the status of the enterprise performance measure/activity they are responsible for.
• Information in the completed templates is collated by the Governance and Reform Division and reported to the EBC. The report is a traffic light report that notes each activity/sub-activity as outlined in the corporate plan, the Accountable Officer, and the performance and risk of the activity not achieving its intended outcome.¹⁰² A brief narrative is provided on each measure/activity, with the report noting changes to the status of activities and those activities at risk of not delivering the intended outcome.

4.7 Defence People Group (DPG), through its Deputy Secretary as the Responsible Officer, is responsible for completing the reporting template for the activity in the performance report that relates to the strategy. Defence advised the ANAO that for the March 2018 bi-annual report, Defence People Group received the performance report from each Group and Service with their assessment of their implementation of the strategy. This approach was discontinued as the level of detail in the responses varied. The new approach required the Responsible Officer for each activity to obtain the information needed for reporting from other areas in Defence. This could now be done through business as usual practices rather than through the use of the template.

4.8 Defence People Group did not have a documented methodology for calculating the results reported in the bi-annual report. Defence People Group advised the ANAO that information populated in its biannual reports is based on its knowledge from working groups on various activities, HR Business Partners, and various reports.¹⁰³ Defence People Group further advised that the methodology and metrics used in its performance reporting on the strategy generally included the following¹⁰⁴:

• progress against the cultural reform priorities — measured through enterprise survey data, using 2018 survey data as a baseline¹⁰⁵;
• overall workplace climate — measured through morale, team productivity and workforce engagement via survey results, with a target of historically stable results and monitoring for any reduction;
• individual priorities — measured through scales in the YourSay survey designed to measure the underlying constructs as well as other relevant data, with the target being ‘Increase positivity by end of 2022 in areas of focus’; and
• Group and Service implementation of cultural reform priorities — measured through their cultural programs/plans and inclusion of cultural priorities in business plans.¹⁰⁶

4.9 Defence People Group advised the ANAO that the following ‘data sources’ were used for its reports: YourSay Organisational Climate Survey 2018; Defence Reconciliation Action Plan; Defence’s Commitment to Building Capability Through Inclusion; Defence Work Health and Safety Strategy; Defence Mental Health and Well Being Strategy; ADF Total Workforce Model; APS Flexible Work Arrangement policies; APS Performance Management Framework; Leadership Programs; and Culture Plan examples.¹⁰⁷

4.10 A draft Pathway to Change Measurement Framework was developed in 2019 using survey data, with the aim of measuring Defence culture overall as well as providing a measure of each cultural reform priority. The framework was used for the November 2019 and March and November 2020 bi-annual reporting to the Enterprise Business Committee (EBC).

4.11 The ANAO sought evidence of the draft measurement framework’s approval. Defence advised the ANAO in April 2021 that the framework was approved in August 2019 and agreed for use in enterprise reporting for 2019–20 onwards. Defence was unable to provide evidence of the framework’s approval, such as a signed-off framework document or other documentation indicating who approved the framework and when they did so.

4.12 Table 4.1 (below) outlines the performance rating and risk rating reported to the EBC based on advice by Defence People Group in relation to the strategy, for the period March 2018 to November 2020. The table reflects advice provided in biannual performance reporting and annual performance statement reporting.¹⁰⁸

Table 4.1: Enterprise reporting information for the strategy provided to the EBC

Note a: The Annual Performance Statement does not contain a risk rating.

Note b: This refers to the 2017–18 performance statement result.

Source: ANAO analysis of Department of Defence documentation.

4.13 Table 4.1 indicates that the strategy has generally been rated as ‘on track’ and risk has generally been assessed as ‘low’ in bi-annual reporting, with the exception of the report for May 2020¹⁰⁹ which assessed a ‘medium’ risk on the basis that:

… delays by Groups and Services in implementing their culture plans has created a risk to the delivery of this activity, although overall the performance of the reform program is on track.

4.14 The draft performance report completed by Defence People Group for input into the March 2020 performance update for the EBC provided a progress assessment of ‘At risk’.¹¹⁰ Progress was reported as ‘On Track’ in the performance report provided to the EBC. Defence advised this was due to the overall assessment of the activity being considered to be ‘On Track’, with Defence People Group noting a risk to the implementation of the six cultural priorities (one of the performance criteria for the activity) due to delays in the implementation of Group and Service culture plans.

Group and Service reporting

Group and Service reporting against their business plans

4.15 Performance measures contained in Group and Service business plans (where recorded) related generally to implementing the six cultural priorities or implementing culture plans. Reporting by the Groups and Services against their business plans, including outcomes against relevant performance measures, is held within each Group and Service, and is not collected and collated centrally by Defence People Group.

4.16 For the purposes of this audit, Defence People Group requested information on Group and Service business plan reporting arrangements for the period 2018–19 to 2020–21.¹¹¹ Seven of the 14 Groups and Services¹¹² advised, as part of their response to Defence People Group, that formal reporting arrangements for their business plans were not established for either all or a portion of the specified period and that other internal reporting and governance mechanisms were used.

4.17 The ANAO reviewed the business plan reporting provided to Defence People Group by the Groups and Services.¹¹³ The ANAO observed that the approach to business plan reporting varied between Groups and Services. For instance:

• there were differences in the frequency of reporting (for example, every two months, quarterly, or tri-annually); and
• in the performance metrics and targets reported against (for example, percentage increase of indigenous or female participation, the implementation of key Group and Service documents/plans by specified dates, responses to specific questions in the YourSay survey, or reported incidents of specific behaviour).

Group and Service reporting against their cultural plans

4.18 Limited information on Group and Service reporting on culture is held by Defence People Group. For the purposes of this audit, Defence People Group sought information on the cultural reporting of Groups and Services. The cultural reporting provided to the ANAO included: specific briefs to key Group or Service governance committees on the implementation of cultural plans or initiatives; Group or Service results for the Australian Public Service (APS) Commission’s APS Employee census; and presentations on Group or Service cultural initiatives and actions.

4.19 The ANAO’s review of the cultural reporting provided to Defence People Group by the Groups and Services, for the period 2018–19 to 2020–21, identified that there was evidence¹¹⁴ of activities undertaken in support of the strategy in the following Groups and Services:

• Army made direct references to ‘Pathway to Change’ in agendum papers to the Chief of Army’s Senior Advisory committee¹¹⁵;
• Navy made direct references to the second strategy in the terms of reference and signals released from the Next Generation Navy Steering Group;
• Contestability Division, which re-joined the Strategic Policy and Industry Group in early 2020, established a steering group in July 2019 to deliver on Defence’s cultural intent and the goals of the strategy;
• Defence Science and Technology Group made direct references to the strategy in culture workshops, leadership papers and other strategic and culture plans; and
• Defence Finance Group developed its own Cultural Intent Statement 2020–22 which links to the second strategy.

4.20 For the other Groups and Services, the cultural reporting provided to the ANAO did not include direct references linking the activities to the second strategy.

Central monitoring

4.21 As discussed in paragraph 3.33, the second strategy states that Defence People Group will continue as the policy lead for organisational level cultural reform initiatives, as well as facilitating, monitoring and reporting on the implementation of cultural reform in Defence.¹¹⁶ The ANAO reviewed whether Defence People Group monitored Group and Service implementation of the cultural priorities against what was recorded in their business plans and later in their cultural plans. As discussed, Defence People Group has not formally collected or collated data from Groups and Services on their implementation. For the purposes of this audit, Defence People Group sought information on Group and Service business plan reporting arrangements and their cultural reporting.

4.22 Defence advised the ANAO in January 2021 that information on implementation of the second strategy by Groups and Services is received through a number of sources, including:

• through the Cultural Reform Advisor Network (disbanded in 2019);
• meetings between the One Defence Culture team and Service Culture representatives and HR Business Partners ;
• support to Groups and Services in developing and implementing their culture plans¹¹⁷; and
• participation in Group and Service cultural steering group meetings.

4.23 The absence of a structured approach by Defence People Group to collect and collate data from across Defence on Group and Service implementation of the second strategy limits the assurance that can be provided to Defence’s senior leadership on the progress and effectiveness of the implementation effort. In the absence of such an approach the ANAO sought written representations in February 2021 from all Group Heads and Service Chiefs on implementation of the second strategy in their Group or Service. Responses were received relatively quickly from all Group Heads and Service Chiefs, and there would be merit in Defence considering the implementation of such an assurance process internally. To provide a third party perspective on the assurance process, Defence should also consider a role for the Defence Audit and Risk Committee.

Group and Service representations to the ANAO

4.26 As noted in paragraph 4.23, the ANAO wrote to the 11 Defence Group Heads and the three military Service Chiefs in February 2021, requesting information on their local level implementation of the strategy and how progress towards intended outcomes is tracked. All Group Heads and Service Chiefs provided a written response to this request.

4.27 The representation letters received by the ANAO indicate that the three military services have parallel cultural strategies, tailored for their particular service requirements:

• The Chief of Navy (CN) advised that Navy’s cultural reform program commenced in 2009 under the New Generation Navy (NGN) program ‘to address known and foreseen organisational cultural issues’, with a key aspect of the program being the re-launch of Navy Values and the development of Navy Signature Behaviours. This cultural reform program evolved into NEXT Generation Navy, launch in 2018. Navy advised the ANAO that, in 2012, the then Chief of Navy directed ‘that the NGN program represent our Navy’s implementation of the new Pathway to Change program. Navy further advised that ‘…this deliberate choice, made by CN in 2012 and continued by subsequent CNs, was based on the need to create meaningful change through initiatives that are relatable and relevant for Navy People operating in a maritime domain context’.
• The Chief of Army (CA) advised that Army’s cultural reform commenced in response to the 2012–17 strategy (first strategy), with the release of the 2013 Chief of Army (CA) Directive, The Introduction of ‘Respect’ as the Fourth Value, to ‘build a more inclusive culture, essential to generating and sustaining capability’. In 2016, a further CA Directive, Army’s Enduring Cultural Foundations, was released to reflect the evolution of Army’s core values and behaviours. In 2017, all of Army’s cultural initiatives were consolidated to form Good Soldiering, Army’s overarching response to the 2017–22 strategy (the second strategy). Following the ARHC’s 2018 review of Army’s implementation of cultural reform, Good Soldiering was relaunched in March 2019. In October 2020, Good Soldiering was updated to incorporate the new departmental values and behaviours. In 2021, a number of CA directives have been released to re-inforce the expected behaviours of Army personnel.
• The Chief of Air Force (CAF) advised that Air Force’s cultural reform program commenced in 2000 with the Air Force Adaptive Culture Program to ‘instil a generational-level change in the way Air Force approached its people and culture’. This program also established the first values-based behavioural expectations for Air Force. In 2012, Air Force’s cultural program was re-focused to incorporate the first Pathway to Change strategy objectives, under the New Horizon program. Air Force also advised that ‘Pathway to Change established clear common cultural objectives for the whole-of-Defence, however, meeting Pathway objectives alone would not create all of the cultural elements required for Air Force’s military purpose’. Air Force further advised that it is now moving beyond New Horizon to a new cultural program—Our Air Force, Our Culture—and that it remains on the same cultural continuum established in the second strategy and Air Force’s previous cultural strategies.

4.28 The ANAO’s review of a selection of key points from the written representations is set out in Table 4.2 (military Services) and Table 4.3 (Defence Groups).¹¹⁸ The representations discussed various locally driven activities being undertaken by each Group/Service. As noted above, the three military Services focused on their complementary cultural strategies while the Defence Groups observed that they had each developed their own cultural plans/statements/intent. The methods adopted for monitoring intended outcomes varied between Groups/Services.

Table 4.2: Military Services — selection of key points made in representations to the ANAO

Key: A — Defence Enterprise Reporting; B — Uses Defence Survey and/or Census Data (YourSay, APS Census); C — Local level monitoring;

Source: ANAO review of representations provided by Service Chiefs.

Other reporting to Defence committees

4.29 A diagrammatical representation of Defence’s Senior Committee structure is at Appendix 6.

Enterprise Business Committee (EBC)

4.30 The ANAO reviewed outcomes from EBC meetings held between February 2017 and August 2020 (43 meetings) to identify discussions about the second strategy or culture more broadly.¹¹⁹

4.31 The strategy was explicitly discussed as a discrete item on one occasion, in a verbal brief provided in February 2017. The First Assistant Secretary Defence People Group provided an update on the development of the strategy.

4.32 On the one other occasion that the strategy is mentioned in the outcomes of an EBC meeting, in May 2019, it was in passing in reference to another paper, the Defence Compliance Report, where the committee noted that ‘cultural reform progress under the Pathway to Change program was evident in the reduction of fraudulent behaviour and violation of workplace ethics’.

4.33 In June 2020 a verbal update was provided on one of the six cultural priorities (capability through inclusion), however the strategy itself was not noted in the minutes of the meeting outcomes.

4.34 Culture was mentioned or discussed in a variety of other contexts including cultural awareness training, recruitment, the administrative policy framework, tools for conducting culture audits and in relation to the Leading for Reform Program, service delivery, Defence customers satisfaction survey, APS retention, record management practices, travel and credit card spending, implementation of the Defence Values and Behaviours, and the ‘inclusion of a continuous improvement culture line of effort’ in the Defence Transformation Strategy. There is no evidence in the outcomes of this reporting of any feedback, suggestions or guidance on progressing the strategy.

4.35 A brief prepared for the Assistant Secretary Culture and People Development in May 2019, noted that the One Defence Culture Team had proposed enterprise level updates to the EBC on each of the six cultural priorities, one every two months. This was intended to be an additional mechanism to update senior leaders on the progress of the second strategy, and the updates were added to the EBC schedule. The brief noted that in 2018, it was difficult to provide substantial updates on some priorities as the strategy was relatively new, and no initiatives or evaluations had taken place under the strategy, with similar issues arising in 2019.¹²⁰ It was recommended and agreed that an annual update be provided to the Defence People Committee on the strategy, with the initial update to occur in September 2019. Defence advised the ANAO that this update did not occur.

Defence Committee (DC)

4.36 The ANAO also reviewed the meeting outcomes for the Defence Committee¹²¹ for the period July 2018 to October 2020 (39 meetings). There were four specific discussions on the second strategy at the committee during the period examined. The first occurred three months after the launch of the strategy, with the committee noting the refreshed cultural intent statement and the six cultural reform priorities, and discussing the progress of cultural reform implementation. The other three discussions related to achieving cultural change in relation to work health and safety. Of the 39 meeting outcomes reviewed, 15 meetings included discussion on aspects of culture, including: Defence’s safety and security culture, travel and credit card spending, ethical behaviour in procurement, unacceptable behaviours, work health and safety, family and domestic violence, and the Defence Values and One Defence Leadership Behaviours.

Defence Civilian Committee (DCC)

4.37 The ANAO reviewed the meeting outcomes for the DCC for the period February 2018 to November 2018.¹²² Although the strategy states that reporting to/and strategic oversight will be provided by the Enterprise Business Committee, Defence People Group was regularly reporting on individual priorities of the strategy to the Defence Civilian Committee, until the committee ceased operating in January 2019. Of the seven meeting outcomes reviewed, there were two meetings where the second strategy or the six cultural priorities were specifically discussed, and six meetings where there were discussions relating to culture more broadly.

4.38 At the meeting where the second strategy was explicitly discussed, the committee noted plans to continue Defence’s collaboration with the Australian Human Rights Commission and agreed that this should be expanded to include the APS workforce, to drive the First Principles Review and cultural reform priorities. There was also discussion of which Defence Groups should be included in this activity.¹²³ Other discussions of culture related to: the 2017 Unacceptable Behaviours survey results; One Defence Leadership Behaviours; work, health and safety; and remuneration arrangements (individual flexibility arrangements and Defence capability payments).

4.39 The DCC Forward Work Plan noted that each of the six cultural priorities would be discussed individually at DCC meetings throughout 2018. Review of the agenda papers and meeting outcomes indicates that two priorities were discussed: ‘Capability Through Inclusion’ in March 2018, and ‘Workplace Agility and Flexibility’ in December 2018. The discussion on the ‘Capability Through Inclusion’ priority noted that Defence was unlikely to meet its Indigenous representation target by 30 June 2018, and the committee agreed that increasing the number of women in leadership roles within Defence should remain an organisational priority for 2018.

Defence People Committee (DPC)

4.40 The DPC provides strategic oversight of the delivery of people management services, policy, compliance, performance reporting and assurance in relation to both APS and ADF personnel.¹²⁴ This includes monitoring the second strategy and One Defence initiatives.¹²⁵

4.41 The ANAO reviewed meeting outcomes for the DPC for the period April 2018 to October 2020 (16 meetings). Three meetings included specific discussion on the strategy. Discussion related to: the Chair (Deputy Secretary Defence People) noting that the strategy is difficult to measure and therefore difficult to hold Defence to account; a paper seeking the committee’s endorsement for the revised ‘Defence’s Commitment to Building Capability Through Inclusion Statement’¹²⁶; areas of focus for the DPC going forward¹²⁷; and a presentation to the committee on work to measure the six cultural reform priorities..

4.42 More general discussion of culture occurred at six meetings, including discussions on: performance frameworks; retention of personnel; security culture; proposed changes to the Defence Equity Advisor; implementation of workforce plans; update on Air Force and Navy cultural programs; the possibility of Defence developing an overarching theory of change regarding cultural reform; and workforce management.

External reporting on performance

4.43 In its Corporate Plan for 2018–19, 2019–20 and 2020–24, Defence stated that implementation of the strategy contributed to the achievement of its ‘Purpose 2: Protect and advance Australia’s strategic interests’. Table 4.4 sets out how Defence expressed the role of the second strategy in those corporate plans, and the results reported in its annual performance statements for the relevant reporting periods.¹²⁸

4.44 As shown in Table 4.4, the strategy was identified as a separate activity in Defence’s corporate plans for 2018–19 and 2019–20. Implementation of the cultural reform priorities became a target in the 2020–24 corporate plan, against a broader workforce and culture performance criterion.

4.45 Defence reported in its performance statements for 2018–19 and 2019–20 that implementation of the strategy was assessed as ‘partially achieved’, as it is a multi-year strategy and cultural change takes time to be fully realised.

4.46 Table 4.4 indicates that the performance criteria for 2018–19 to 2019–20, and the target for 2020–21, was implementation of the six cultural priorities. Defence did not develop supporting documentation that clearly defined what implementation of the priorities would involve, or map which enterprise level activities contributed to each cultural change priority. This approach made it difficult for a reader to track the strategy’s implementation progress over time. Defence’s work to address these limitations is discussed in paragraph 4.63 below.

4.47 Defence advised the ANAO that while there is not currently a documented process for determining the result for the annual performance statement with regard to the strategy¹²⁹, the calculation of the 2018–19 and 2019–20 result was informed by an evidence base that included:

• a review of Defence’s cultural reform initiatives;
• Group and Service culture plans;
• internal surveys;
• a review of submitted content for the Strategic Workforce Management section of the annual report;
• the One Defence Culture Team’s broader knowledge base of activities, projects, reviews, audits, investigations, reporting and surveys;
• APS Census results and analysis;
• monthly Defence Workforce Reports;
• Defence 2022 Quarterly reports;
• mandatory training completions; and
• a 2020 analysis of the IGADF (Inspector-General of the Australian Defence Force) military justice performance audit survey data of ADF members’ experience of unacceptable behaviour.

4.48 To provide assurance to the accountable authority about the accuracy of reported non-financial performance information, Defence has been testing the appropriateness of a sample of performance criteria. The most recent report on Defence’s 2019–20 Annual Performance Statement was completed in August 2020. The performance criteria relating to the strategy were not included in the sample selected for the 2020 review. Similarly, the performance criteria relating to the strategy were not included in the sample selected for the 2019 review.

4.49 The ANAO did not test Defence’s performance statement criteria (discussed in Table 4.4 and paragraph 4.45 above) in terms of accuracy, reliability and completeness because Defence has not established a measurable outcome for the implementation of the six cultural priorities. Measurable outcomes (and reporting against those outcomes) would help Defence leaders establish whether the investment of public resources in cultural reform activities is resulting in intended change, and would help identify whether intervention is needed to manage risks to the successful implementation of the second strategy. Defence should establish measurable outcomes for the 2017–22 strategy and related cultural reform activities, and a set of performance criteria to help assess progress towards the desired cultural state.

Can Defence demonstrate that intended outcomes are being achieved through its implementation of the strategy?

4.52 As discussed, the 2017–22 strategy did not include outcomes or performance measures relating to the desired enterprise wide cultural change. While each of the six cultural priorities outlined a high level intent, Defence did not clearly articulate in the strategy what the expected outcome of each priority was and what success would look like.

4.53 At the June 2017 joint committee meeting (discussed in paragraphs 2.4–2.6) which considered and approved the second strategy, members endorsed the development of an evaluation framework for the strategy.

Evaluation framework

4.54 Defence initially intended to undertake six in-depth assessments (deep dives) to collect baseline data on each cultural reform priority and identify potential barriers to and enablers for achievement of these priorities. Two assessments were undertaken on the cultural priorities of: Ethics and Workplace Behaviours (2017–18), and Leadership Accountability (2018–19).¹³²

4.55 Defence advised the ANAO that these assessments were discontinued in April 2019.

4.56 A discussion paper on early findings from the strategy was prepared for the Assistant Secretary Culture and People Development in June 2019. This paper noted that while the in-depth assessment process had:

… generated useful information regarding our cultural shift and where our culture requires further enhancement, it has not provided clear guidance on where Defence should continue to invest our resources and focus for each priority.

4.57 The discussion paper also noted that while cultural reform progress was intended to be evaluated as part of Defence’s regular enterprise performance reviews (as stated in the strategy):

… with little enterprise level oversight of progress against each of the priorities to date and varied levels of input to this process from the Groups and Services, we cannot accurately and confidently identify our progress against each priority.

Mapping of enterprise activities

4.58 In 2019, Defence commenced work on mapping existing enterprise activities that contributed to the achievement of the cultural priorities.

4.59 In February 2019, during the clearance process for the March 2019 bi-annual report to the Enterprise Business Committee, the First Assistant Secretary Defence People, Policy and Culture:

• approved the report — the strategy was given an ‘on track’ rating for its end of financial year projection assessment and a ‘low risk’ rating for its risk to achievement; and
• noted that unless a plan was developed in relation to the implementation of the cultural priorities by 2020, future bi-annual reporting of the strategy as being ‘on track’ and ‘low risk’ would not be approved.¹³³

4.60 Defence subsequently commenced the mapping of enterprise activities to the six cultural reform priorities.

4.61 In 2019, Defence commenced work on a review of existing enterprise activities (policies, programs and initiatives) to identify which activities could be used to demonstrate the achievement of the strategy. In November 2019, Defence engaged an external consultancy¹³⁴ to assist with this review, including validating the work conducted to date and identifying any gaps in cultural activities based on the initial mapping exercise. The review identified 413 activities which were then mapped against the six cultural priorities. Of these 413 activities, 43 were identified as new activities since the second strategy’s release in 2017. The mapping also included contact points for each enterprise activity to assist the One Defence Culture Team in understanding the program and providing a contact in each activity when seeking information for enterprise reporting.

4.62 While undertaking the above activities, it ‘became apparent that a lack of program structure was impacting Defence’s ability to effectively understand and report on cultural reform.’ A second phase of work was commenced by the consultant in June 2020, which included program definition and a maturity assessment for the strategy, as well as a cultural dashboard prototype.

4.63 As part of this work, cultural priority outcomes were developed for each of the cultural reform priorities to provide clearer guidance as to what each priority was seeking to achieve.¹³⁵ In April 2021, Defence advised the ANAO that:

The outcomes are being used to improve the measurement of cultural reform. Multiple data points are aligned to the outcomes within the Culture Dashboard developed by PWC to the minimal viable product stage.

In addition, the outcomes have been used to support groups and services identify focus areas for their cultural plans.

4.64 A report completed for Defence in June 2020 observed that:

• a number of the priorities did not have a clear enterprise lead, creating a challenge for clear accountability for strategy outcomes and ensuring there is alignment between the strategy and other enterprise activities and programs that are being delivered;
• the Leading and Developing Integrated Teams priority was the least developed cultural priority in both initiatives being delivered and clarity of outcomes being sought;
• while there were many enterprise level activities that contributed to the strategy, active management of these activities did not appear to have a clear and accountable connection to the strategy; and
• building a comprehensive current map of all enterprise activities would require engagement across Groups and Services which was not an option available to the consultant.

4.65 It was initially intended that the consultant develop a tool to be used to provide a maturity rating against each cultural priority outcome statement. Following feedback from Defence on an initial approach to developing this tool — that it would be overwhelming for respondents — the approach changed to designing a tool to support Groups and Services in understanding the cultural priorities and developing their culture plans.

4.66 Reporting to the Enterprise Business Committee in April 2020¹³⁶ noted that the gap analysis indicated that:

… while significant activity is occurring, a vast majority of the activities were developed based on other organisational needs, rather than being driven strategically by Pathway to Change [the second strategy]’.

4.67 This report also noted that the design of a cultural priorities measurement and evaluation framework, due in Quarter 1 2020, was rated as ‘Off Track’. Defence advised the ANAO in January 2021 that this framework is no longer considered ‘Off Track’.

Performance framework

4.68 As previously noted (see paragraph 4.10), a draft Pathway to Change Measurement Framework was developed in 2019 but its approval was not formally recorded.¹³⁷ The draft framework comprised three levels of reporting:

1. Enterprise Performance Reporting — which included key survey metrics to measure Defence culture overall as well as a measure of each cultural reform priority.
2. Senior Leader Dashboard — a dashboard report of data, analysis and interpretation of progress against each cultural reform priority.
3. Detailed Report — a more comprehensive set of metrics to provide an understanding of what change is occurring and areas of focus.

4.69 In June 2019 a document titled A Proposed Measurement and Evaluation Approach to Evaluate the Pathway to Change Priorities for Defence, was developed by Defence’s Directorate of People Intelligence and Research (DPIR). The document was developed following a request from the One Defence Culture Team¹³⁸ for advice on how to use existing data collected by the DPIR to evaluate the second strategy. This document outlined a number of data sources that would contribute to the evaluation of the strategy and set out proposed indicators, measurement data sources and benchmarks/targets for each of the cultural priorities.

4.70 In June 2020, Defence engaged an external consultant (PwC) to create a cultural reform dashboard prototype for use by senior leaders based on the work undertaken to date (as outlined in paragraphs 4.63 to 4.67). This included updating data sets to include various survey data, formalising data sharing agreements with data owners, providing analysis of the revised and updated priority outcomes, and co-developing a minimum viable product dashboard, which Defence would then be able to use to measure the progress of achievement of cultural priority outcomes to report on the strategy. Defence advised the ANAO in January 2021 that this work was close to completion. Defence further advised in April 2021 that the cultural reform dashboard had been delivered to a minimal viable product stage. The development of a performance framework remained a work in progress at the completion of this audit.

Appendix 1 Department of Defence response

Appendix 2 Recent reviews undertaken by the Commonwealth Ombudsman on Defence’s internal policies relating to complaints and abuse

1. The Commonwealth Ombudsman’s role as the Defence Ombudsman (the Ombudsman), is established under Part IIA of the Ombudsman Act 1976 and the Ombudsman Regulations 2017.

2. The Ombudsman may inquire into Defence’s own procedures for making and responding to complaints of abuse, to consider the appropriateness and effectiveness of those procedures.

3. In August 2019, the Ombudsman released a report on Defence’s policies for receiving and responding to reports of abuse.¹³⁹ This report noted that the Ombudsman was largely satisfied that Defence policies and procedures were appropriate and supported the handling of reports of abuse. The report made six recommendations. Defence’s response to the report noted it supported the intent of all recommendations.

4. Another report by the Ombudsman in August 2019, Overview of the Defence abuse reporting function by the Defence Force Ombudsman, outlined how the Ombudsman has administered its Defence abuse reporting functions and provided reflections on progress to date.

5. In July 2020 the Ombudsman released a report Inquiry into behaviour training for Defence recruits.¹⁴⁰ This inquiry assessed the appropriateness of Australian Defence Force recruit training content and delivery based on Defence’s established policies and procedures, and considered the evaluation approach taken by Defence to assess the effectiveness of training on required behaviours. The findings in the report were positive overall, with some areas for improvement identified. The report made five recommendations.¹⁴¹ In response to the report, Defence noted that it supported the recommendations and commented that the recommendations supported the continued implementation of its Pathway to Change cultural reform agenda.

Appendix 3 Key steps in the development of the 2017–22 strategy

1. Figure A.1 sets out the key steps in the development of the second strategy.

Figure A.1: Key steps in the development of the 2017–22 strategy

Note a: Defence documentation described the orange coloured activities as ‘evidence base activities’ and the green coloured activities as ‘strategy development and implementation planning’.

Note b: The One Star/SES Band 1 Points of Contact meeting in September 2017 was to provide a culture briefing to representatives from each of the Groups and Services at the One Star/SES Band 1 level.

Note c: In June 2017, an extraordinary joint meeting of the Chiefs of Services Committee (COSC) and the Defence Civilian Committee (DCC) met to approve the strategy document, the cultural intent statement and the six cultural priorities.

Note d: In July 2017, the Defence Secretary and Chief of the Defence Force signed off on the cultural intent statements and six priorities, but not the strategy document.

Source: ANAO analysis of Defence documentation.

Appendix 4 Publicly reported data on incidences of unacceptable behaviour and sexual misconduct in Defence

1. Defence publicly reports data on incidences of unacceptable behaviour. Defence defines unacceptable behaviour as:

Unreasonable conduct at work or in any situation that may be connected to Defence that is offensive, belittling, abusive or threatening to another person or adverse to morale, discipline or workplace cohesion. This includes unlawful discrimination and harassment.

2. Data on unacceptable behaviour complaints was included in Defence’s 2019–20 Annual Report, as shown in Figure A.2.

Figure A.2: Unacceptable behaviour complaints reported as received, finalised and having occurred, 2015–16 to 2019–20^a

Note a: Defence notes in the Annual Report that, in 2019–20, Defence: commenced a review of the Complaints and Resolutions Manual to deliver a revised, user-friendly reference for all Defence personnel; initiated a review of Defence’s unacceptable behaviour reporting systems to simplify, streamline and improve reporting capability; and designed an enhanced complaints-handling service that will be trialled and evaluated in 2020–21.

Defence advised the ANAO that: ‘Defence personnel are responding to continued encouragement to report both past and current incidents of unacceptable behaviour and this is reflected in the data whereby complaints received may relate to incidents that have occurred in previous years. An incident may occur in one financial year but the complaint received by Defence in a subsequent financial year.’

Source: Department of Defence Annual Report 2019–20, p. 141.

3. Defence also reports publicly on sexual misconduct in Defence. This includes, for example, data on incidences of reported sexual assault (see Table A.1) as well as data on the services provided by the Sexual Misconduct and Prevention and Response Office (SeMPRO)¹⁴² (see Table A.2 and Figure A.3).

Table A.1: Reported Defence sexual assault incidents per year^a,b

Note a: The sexual assault figures are drawn from a live policing database and reflect the Joint Military Police Unit’s understanding of matters as at 5 July 2020. As initial reports are investigated and/or finalised, these figures may change.

Note b: Defence’s reports between 2013–14 and 2017–18 used the definitions in the Model Criminal Code, which classifies non-penetrative sexual offences as indecent acts. Reports from 2017–18 onwards use the broader ANZSOC definition of sexual assault, which includes penetrative and non-penetrative sexual offences.

Source: Department of Defence Annual Report 2019–20, p. 14.

Table A.2: SeMPRO new clients from 2013–14 to 2019–20, by type^a

Note a: Data is collected during service provision and is sub ject to change as clients reveal additional information. The figures previously reported in 2018–19 for the following categories were: 108 for support and case management clients; 265 for advice clients; 400 for total number of new clients.

Source: Department of Defence SeMPRO Annual Report 2019–20, p. 14.

Figure A.3: SeMPRO support and case management client’s recent historical experiences, 2013–14 to 2019–20

Source: Department of Defence SeMPRO Annual Report 2019–20, p. 9.

Other data sources

4. Both the Inspector-General of the Australian Defence Force and the Director of Military Prosecutions produce data annually on military justice statistics as well as some civil convictions for Australian Defence Force personnel.

Appendix 5 Inputs by Defence People Group into bi-annual reports, March 2018 to March 2020

1. Table A.3 outlines the targets, methodology and metrics, risks and data sources used by Defence People Group (DPG) as inputs to the bi-annual reports provided to Defence’s Enterprise Business Committee (EBC) for the period March 2018 to March 2020.

Appendix 6 Defence Senior Committee Structure