 | Terry MoranSecretary, Department of the Prime Minister and Cabinet, Australia  View Video
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Terry Moran, the number-one public servant in Australia, suggests that there are limits to the lessons that private-sector executives can take from his career. But, in fact, almost every leadership quality he discusses applies equally in the private and public sectors.
Moran talks about the importance of having a strategy focused on meeting customer needs and of finding the right people to execute the strategy. He wants to instill greater accountability into Australia’s public service and push responsibility away from the center, closer to customers. Moran’s customers may be “citizens, communities, and businesses,” but his aspirations are similar to private-sector CEOs. In the public and private sectors alike, leaders want to get the most out of their people and their organizations.
Moran has been running government agencies most of his adult life. Early in his career, his focus was education and training. In 2000, he was tapped as the top public servant of Victoria, Australia’s second most populous state. In 2008, Prime Minister Kevin Rudd asked him to assume a similar role for the national government. He was intimately involved in creating the government stimulus program that prevented Australia from falling into a recession.
Moran discusses leadership in his conversation with Anthony Roediger, a partner and managing director of The Boston Consulting Group. Excerpts from their conversation follow.
What are the key leadership qualities that you have honed in your career?
The lessons are perhaps more applicable in the public sector than elsewhere, although there are common threads. In government, you can easily be weighed down by process. If that’s where you end up, you’re never going to achieve much, because the process is designed to make you focus inward.
Success in the public sector is dependent on having an outward-focused strategy, in particular one that sees things from the point of view of citizens, communities, and businesses; communicating that strategy through the organization; finding the right people with the right skills to help deliver it; holding them accountable; and giving them lots of feedback on how they’re doing. Now this is terribly simple and straightforward stuff, but ironically its application is somewhat variable in the public sector.
At the national level, for various reasons, large parts of the public service have become obsessed with process and inwardly focused. And one of the challenges is to try and turn that around and have a much more intensive concern for the real problems of citizens, communities, and businesses.
What do you see as the key attributes of a strong leader? In a government context, do you need different or additional skills than in a business context?
Many of the skills are the same, and there are many CEO jobs in the public sector that can be reasonably compared to CEO jobs in the private sector. But in the public sector, we encumber ourselves with many restrictions. A common complaint is that underperformance isn’t dealt with. But that really hides another problem, which is that we are not necessarily good at getting the best people into the right jobs to deliver the strategy that is required.
There is also a tendency in the public sector to try and hold all the reins. You have got to try to put far more responsibility out where the services are delivered, whether it is in a hospital, a school, a trade college, or a tax office. Making that cultural shift is taking a long time, but it will happen eventually.
What is your perspective on leading through the past 12 to 18 months? Have you led differently, compared with two or three years ago?
The financial crisis crept up on us as much as it crept up on people in other countries. But at the top of government in Australia, you tend to have quite a collegial environment. The incentives encourage cooperation rather than competition. It was possible fairly quickly to pool resources, to get good intelligence on the problems, to make quick decisions, and then to implement. So for a person like me, it was quite an exciting time.
Prime Minister Kevin Rudd was ruthlessly determined to get the right answers and then have them implemented quickly. We have done fabulously well, I think, in rolling out the stimulus package. We started 50,000 different projects, many of them are already complete, and half the money has been spent. Australia’s Treasury department reports that without the stimulus package we would have ended up in a recession. Instead, we avoided one.
Looking forward, what fundamental leadership challenges do you see in the next few years?
The Australian economy continues to change because of globalization. We have to give more thought to where we are going, particularly given the strength of the resources sector, which accounts for a large part of our GDP. We also have a problem with the aging of the population, although our population will still grow very substantially over the next 40 years. There will also be very big challenges in education and training. We will not see the improvements in productivity that will underpin greater prosperity in our society unless we can improve both education and training.
Compared with China or the United States, we are a relatively small country. We have to be constantly conscious of where the United States, China, Japan, and India are going, and we have to be handling all those relationships in view of our national interests. It is a pretty tricky business. But so far I think we’ve been doing quite well.
In ambiguous and uncertain times, sometimes the natural tendency of leadership is to exert greater control. How do you balance that tendency with the need, especially in the public sector, for employees to take initiative?
Over about 20 years in the public sector in Australia, there’s been a gradual move toward what is called a purchaser/provider split. Government buys services from others in the public, private, or not-for-profit sectors. We have to push that shift further, but it has helped us become better at achieving accountability for results. In the stimulus package, in which we had a myriad of public-works projects, we pushed responsibility for delivery as far as we could, but with very tight accountability. Using that approach, we managed to get results that seem to have eluded many other countries that have also tried to stimulate their economies.
Are you seeing any changes in your ability to attract, develop, and retain the next generation of leaders in government?
There are some occupations for which it remains difficult to recruit people. Top-tier economists, for example. We recruit many, but not as many as we’d like. We have to bring in people with exceptionally good degrees and give them the opportunity to become credible economists.
I have been chairing a group that’s been reviewing the Australian public service, and one of the recommendations will be a renewed emphasis on developing people to be future leaders and investing much more money in their preparation.
How do you keep your best people when you sometimes cannot offer them compensation and performance incentives that are comparable with those offered by the private sector? And how do you inspire, engage, and motivate public-sector staff?
We tend to attract large numbers of exceedingly bright people with wonderful university educations. They want to come into the public sector when they are young because they’re attracted to the nature of the work and they want to make a difference.
Young people also want to have work-life balance. So we also find that people who have already started a career, particularly women, are often attracted to the public sector because they can do interesting work and have the work-life balance they are seeking.
At the executive level, however, our remuneration arrangements differ dramatically from those in the private sector. But by that time, in 15 to 20 years, many young people who started as graduates are really into it. The public sector is part of their lives, and they don’t want to leave.
Of course, some do leave, and so you need to hire more people than you think you need. In my department this year, we doubled the number of graduates that we are recruiting. We are getting fabulous people with amazing experiences and terrific qualifications. I don’t know how many of them will be here in ten years, but I’m sure quite a few will be.
We are also seeking to get people in the middle of their careers who have been very successful in the private sector. We have just completed a huge recruitment exercise through which we received about 1,000 applications for senior executive positions; some applicants are from inside the sector, but mainly they are from the outside. We are recruiting people who are prepared to take a fraction of what they have been earning. And they are doing it because they are attracted to the idea of spending some time in the public sector and solving the sort of problems that they know they’ll have to solve in the public sector. The public sector brand in Australia, in other words, is different from the public sector brand in many other countries.