The Swedish Agency for Public Management
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Analysis of internal control and development work at the Public Employment Service (2016:5)

On commission from the government, Statskontoret (the Swedish Agency for Public Management) has carried out an analysis of internal management, control and follow-up at the Public Employment Service. The commission included an analysis of the opportunities and risks in ongoing development work at the Public Employment Service.

An analysis of the effectiveness and development needs in the Authority's internal control was also included in the commission.

Statskontoret's overall assessment

Statskontoret considers that the ongoing development work at the Public Employment Service has the right direction and is well anchored within the agency. However, Statskontoret can see certain risks concerning the ability of the Public Employment Service to implement all parts according to the timetable, due to the wide scope of the development work. This applies in particular to IT development and adaptation of the office network.

Statskontoret considers that internal management, control and follow-up at the Public Employment Service are moving in the right direction, but there are significant needs for improvement that remain. Two steps in the right direction are the work in reducing micro-management and increasing the delegation of operational responsibilities. However, these changes place high demands on the Public Employment Service to prevent the emergence of unjustified local differences in operations, consolidate staff skills and develop the work with follow-up and analysis at the same time.

Many previous shortcomings are being corrected

Statskontoret's analysis confirms the Public Employment Service's own picture of previous shortcomings in management, control and follow-up. Among other things, the Public Employment Service used to have a shortage of long-term planning and an insufficient overall view of internal control. The Public Employment Service had no systematic follow-up and analysis of its operations, leading to lessons not being sufficiently learned.

The Public Employment Service has taken, or intends to take, a series of measures to remedy the identified shortcomings. Control has become more coherent since the operations planning process has been given a more coordinating role for the allocation of funds in the agency, financial follow-up, risk management and development work. The Public Employment Service has also improved work with internal management and control, as well as the structure of procurement and control of external actors. Statskontoret's analysis indicates that there is still a significant need for development in operations, however, which the agency has already stated.

Development work is well structured and anchored ...

In 2014 the Public Employment Service started a development scheme called the path of renewal, which will carry on until 2021. The development work encompasses a broad range of issues, from how the Public Employment Service should develop its services for job seekers and employers to the way in which the agency ensures the correct application of rules and a sound administrative culture. Development work also includes organisational issues as well as questions regarding the staff's attitudes and skills. In total, the Public Employment Service will implement almost one hundred development measures, most of which started/will start in 2015 or 2016.

Statskontoret's analysis shows that there are both strengths and weaknesses in the development work. The strengths include the work having a long-term perspective and a clear structure. Development measures are complementary and focus on identified deficiencies in control. In addition, development measures will be carried out in a line organisation, which in the opinion of Statskontoret leads to a wide ownership of development work among staff and departments affected. The development work appears to be well-anchored within the Public Employment Service.

... but IT development and office adjustment are risks

Statskontoret nevertheless considers that there is a risk of the departments concerned not having sufficient capacity to implement the planned development measures, since they need to handle their usual tasks at the same time. The analysis shows, for instance, that the Public Employment Service may have underestimated its previous problems of achieving results in the IT area, which runs the risk of delaying all the development work. Statskontoret therefore recommends that the Public Employment Service deepens the analysis of the risks involved in the path of renewal and its resource requirements, and should give the highest priority to the development of IT systems and the management of IT operations.

One further risk concerns the hundreds of employment offices that the Public Employment Service intends to phase out by 2018 in order to free up resources for a more efficient method of working. The Public Employment Service has delegated responsibility to its regional managers to consult with the relevant municipalities and decide on which offices will be closed. Until now, the agency has made a decision on just under fifty offices, mostly unmanned or with limited opening hours. When the Public Employment Service closes down the remaining fifty offices, larger offices with more staff may be more likely to be affected. According to Statskontoret there is a risk that this regional process could lead to a much too limited office adjustment for the Public Employment Service to be able to free up the intended resources. Statskontoret therefore recommends that the management of the Public Employment Service take on more responsibility for consultation and decisions on office closures.

More delegated responsibilities involve new demands on internal control

An important part of the Public Employment Service's ongoing development work is that the agency's management and head office will no longer micro-manage local offices' working methods and priorities. Instead, managers and Instead officials at the regional and local level will have more space to determine what needs to be done and how on the basis of the overall objectives, the regulatory framework and local conditions. This means that operations planning will have a more central role and that control will come from a stronger line organisation in which the necessary considerations and clarifications must be made at the relevant level in the formal line of decision.

According to Statskontoret, this indicates that the Public Employment Service is taking steps in the right direction, but these changes do not represent a guarantee that operations will achieve better results. More delegation of responsibilities and powers places different requirements on how the Public Employment Service should control and follow up its operations. For example, many employees have relatively short length of service and have been given an inadequate introduction, which can make it difficult to bear greater responsibility for results. Statskontoret therefore recommends that the Public Employment Service strengthens its work on the development of skills and training for its employees. Statskontoret also recommends that the Public Employment Service introduces a coherent model of control that shows how the various components of internal control work together.

Both opportunities and risks associated with organisational changes

The Public Employment Service has carried out a number of organisational changes, which means that larger local employment service units have been formed and there are now two organisational levels at the regional level - regions and market areas. Statskontoret considers that larger employment offices allow increased specialisation for employment counsellors at each unit. This will create better conditions for the Public Employment Service to achieve greater efficiency and quality. At the same time, the number of decision-making levels may increase the risk of unwanted fluctuations in operations. Statskontoret therefore recommends that the Public Employment Service analyse these issues in more detail.

Long-term work with basic values can strengthen the organisation

The earlier micro-management at the Public Employment Service has resulted in staff taking less responsibility and a lack of trust between different parts of the organisation. In 2015 the Public Employment Service established a set of basic values and a leadership philosophy for the agency. In Statskontoret's opinion, these basic values and leadership philosophy provide important guidance for employees to find a desirable approach, both internally and externally. Statskontoret recommends that the Public Employment Service continues to pursue its work in discussing and consolidating these factors among its employees.

Need to strengthen focus on results and follow-up

According to Statskontoret, the Public Employment Service needs to improve assessing and demonstrating the agency’s achieved results. This in turn requires a change in approach to follow-up and results within the whole agency, and that assessments and follow-up of the consequences are carried out more regularly in ongoing work - particularly with regard to investment in IT development. Statskontoret therefore recommends that the Public Employment Service works in the long term to strengthen follow-up and analysis, as well as conducting a dialogue with the Ministry of Employment to develop its reporting of results in a way that meets the Ministry's requirements.

The government should endeavour to give the Public Employment Service good planning conditions

Statskontoret believes that the government should continue to move away from micro-management, which will provide the Public Employment Service with a better mandate to determine how to achieve its objectives and give it sufficient scope to develop its operations and internal control. The government should primarily aim its control at strategic issues and focus on what the agency should achieve, including its results, but as far as possible avoid too much micro-management of how operations are carried out.

Statskontoret believes that the government should stick to the approach used in 2015 and 2016, which lead to a decrease in the number of commissions and reporting requirements in the appropriations document for the Public Employment Service. The government should also endeavour to provide the Public Employment Service with good conditions for forward-planning in its operations, and as far as possible avoid large, short-term variations in administrative resources for the Public Employment Service. Statskontoret also recommends that the government follows up the development needs within the Public Employment Service's operations pointed out in this report, in particular with respect to the skill’s provision, follow-up and analysis and IT management.