Improving Customer Satisfaction with Government Services

Performance Improvement Improving Customer Satisfaction with Government Services Customer Service Baseline Report New South Wales Government Department of Premier and Cabinet

Department of Premier and Cabinet Performance Review Unit Level 14 Bligh House 4-6 Bligh Street SYDNEY NSW 2000 This report was developed and written by Don Munro and Ken Scalley with the assistance of Hayley Eggleston. The Department of Premier and Cabinet gratefully acknowledges the NSW public sector agencies that provided data, and the feedback on the Preliminary Report provided by the S8 Senior Officers Group. Design by Mark Taylor. Telephone: (02) 9228 5132 Facsimile: (02) 9228 3075 Email: contact_us@dpc.nsw.gov.au State of New South Wales through the Department of Premier and Cabinet, 2008. You may copy, distribute, display, download and otherwise freely deal with this work for any purpose, provided that you attribute the Department of Premier and Cabinet as the owner. However, you must obtain permission if you wish to (1) charge others for access to the work (other than at cost) or (2) include the work in advertising or a product for sale. This document has been prepared by the Department of Premier and Cabinet of NSW for general information purposes. While every care has been taken in relation to its accuracy, no warranty is given or implied. Recipients should obtain their own independent advice before making any decisions that rely on this information. Performance improvement: improving customer satisfaction with government services [set] ISBN: 978-0-7313-3390-5 Customer service baseline report - ISBN: 978-0-7313-3391-2 [Print] Customer service baseline report - ISBN: 978-0-7313-3395-0 (PDF) Published May 2008

Foreword Providing public services in ways that satisfy customers is a fundamental principle of a world-class public sector. Increased customer satisfaction with public services is not only good for customers it can also contribute to greater staff satisfaction, more targeted resource use by the public sector and better economic, social and environmental outcomes for the State. This report, the Customer Service Baseline Report, shows the extent to which NSW Government agencies were measuring, reporting and improving customer service in 2006-07. It shows all agencies had some mechanisms to gain customer feedback, re-design services to better meet customer needs, customise services to meet the needs of individuals and communities, or support front-line employees. It also shows much more needs to be done. This Baseline Report provides the starting point to measure progress as agencies implement their customer service improvement initiatives. Congratulations to all agencies that have already embedded a customer focus throughout their organisations; and I look forward to seeing progress to this end by all agencies in the near future. Robyn Kruk Director General Department of Premier and Cabinet May 2008 Performance Review Unit Customer Service Baseline Report 1

Contents Foreword...1 1. Executive Summary...3 2. Purpose...3 3. Method...3 4. Findings...7 4.1 Customer service operations, 2006-07...7 4.2 Customer service improvement overview...7 4.3 Inputs...8 4.4 Leadership and policies...9 4.5 Customer insight...11 4.6 Service redesign...12 4.7 Customising services...14 4.8 Supporting frontline employees...16 4.9 Measuring customer satisfaction...18 4.10 Customer improvement plans...19 5. Discussion...19 6. Next Steps...20 Appendix: Survey Respondents...21 Performance Review Unit Customer Service Baseline Report 2

Executive Summary Increased customer satisfaction with public services brings many benefits. It can contribute to better outcomes for customers, increased staff morale and service quality, innovation in service delivery within and between agencies, potential savings by ending elements of a service that do not contribute to customer satisfaction and community outcomes, and an increase in public confidence in public services. Improving customer satisfaction with public services is also a State Plan priority for all New South Wales Government agencies. The target is for all agencies to measure, report and improve customer satisfaction with their services. The lead Minister for this priority is the Premier, and all CEOs are reporting on their customer service improvement initiatives as part of the annual Performance Agreement assessment. The Customer Service Baseline Report describes the customer service improvement systems and practices that existed in the NSW public sector in 2006-2007 prior to the commencement of the State Plan customer service improvement initiative. The report is based on information provided by 78 agencies in February, 2008. The information provided by agencies is organised around the four NSW customer service improvement principles: Develop customer insight (research customer expectations and experience). Design services around customers (incorporate the customer voice in how services operate). Respond to individual user needs within available resources. Support employees to provide excellent customer service. Purpose In November 2007 the CEOs of the NSW Government s major budget-funded and business enterprise agencies were asked to provide information on the mechanisms their agencies had to measure, report and improve customer satisfaction. This was the first time that such information had been sought from across the NSW public sector. The purpose of this report is to document the capacity of agencies to measure, report and improve customer satisfaction with their services as at 2006-07. It provides a baseline from which to measure future improvements in customer service. 3. Method In November 2007, NSW agencies were asked to complete a Customer Service Benchmark Survey which asked questions about the mechanisms they had in 2006-07 and their plans to improve customer satisfaction in 2007-08. Performance Review Unit Customer Service Baseline Report 3

The Survey closed in February 2008. The survey was completed on a selfassessment basis. Half of all respondents provided additional material as evidence to support their answers. No independent verification of agency responses has been undertaken. Data were provided by 78 agencies. This is a participation rate of 77%. The respondent agencies employed 256,448 full-time equivalent employees (FTE) in June 2007, or 86% of the total NSW public sector workforce. Based on these two factors, the findings can reasonably be considered to be a representative of results across the NSW public sector. Data was analysed in several ways. Responses were examined on the basis of: Source of funding of agencies (budget and non-budget-funded agencies). Public sector function (such as policy, regulatory, infrastructure and direct service delivery agencies). Policy sectors (such as human service, justice, transport, culture, economic development and environmental agencies). Nature of clients (voluntary, non-voluntary, individual persons and organisations including other government departments). These statistical analyses showed that there were no significant differences between agencies when segmented on the basis of these variables. The only statistically-significant differences in data were between small, medium and large agencies. This report summarises and analyses total responses; and compares small, medium and large agencies. There were 41 small agencies agencies that had 350 FTEs or less. They included small specialised agencies such as the Internal Audit Bureau (9 FTEs); the Casino Control Authority (35) and the Community Relations Commission (71); to larger agencies including the Department of Environment and Climate Change (210); the Office of Financial Management (Treasury) (249); and the State Water Corporation (303). Performance Review Unit Customer Service Baseline Report 4

Table 1: Customer benchmark survey respondents All No. Respondents 41 15 22 78 % Respondents 53% 19% 28% 100% agencies were defined as those with more than 350 FTEs and less than 1,000 FTEs. There were 15 medium agencies. These included Departments of State and Regional Development (425 FTEs); Premier and Cabinet (549); and Water and Energy (684); and non-budget-funded agencies such as TransGrid (942). There were 22 agencies defined as large, that is, having 1,000 FTEs or more. These included Health (92,336 FTEs); Education and Training (an estimated 50,000); Police (19,311); RailCorp (13,805); and Ageing Disability and Home Care (9,431). Major findings are Size of the customer service workforce Almost half (45%) of the total employees in the NSW public sector were working directly or indirectly in customer service functions. The proportion varied between small, medium and large agencies. Customer service employees make up one-quarter (25%) of employees in small agencies, one-third (32%) of employees in medium agencies, and nearly half (46%) of employees in large agencies. Service improvement inputs Some $534m or slightly more than 1% of the total budget expenditure of all respondents was spent in 2006-07 to improve services for customers. A total of 3,106 full-time equivalent (FTE) employees were involved in improving customer service, some 1.2% of the workforce of responding agencies. Leading agencies Five agencies reported they funded and carried out initiatives in 2006-07 consistent with each of the four customer service improvement principles. They were the Australian Museum, Board of Studies, Newcastle Ports, NSW Police Force and SOPA. Differences between small, medium and large agencies There were significant differences between small, medium and large agencies. For example, in 2006-07, small agencies spent an average of $530,000 to improve customer service, medium agencies spent on average $3.24 million and large agencies spent an average of $21.1 million. Leadership Almost all (95%) of large agencies reported having an Executive-level officer with identified responsibility for customer or client initiatives, whilst 80% of medium agencies and less than two-thirds of small agencies had senior executive level leadership to drive customer service improvements. Performance Review Unit Customer Service Baseline Report 5

Business Planning Two-thirds of large and medium agencies report having had customer satisfaction indicators listed in their Results and Services Plan in 2006-07, whilst 44% of small agencies had customer service indicators in their RSP. Publishing customer satisfaction levels Almost two-thirds of large agencies report they published their customer satisfaction levels with their services, whilst 40% of medium agencies and 49% of small agencies reported making these measures publicly available. Measurable standards of customer service Three-quarters of large agencies report having measurable service standards that customers can expect, whilst slightly more than half of small and medium agencies report having quantifiable service standards. The S8 Index Data in this study have been used to develop an index to summarise the overall state of customer service improvement initiatives in NSW. The S8 Index is a weighted average of the number of NSW public sector agencies that completed funded initiatives for each of the four S8 customer satisfaction principles. If all agencies were to complete funded initiatives for each of the four customer service improvement principles then the S8 Index would measure 100%. The baseline S8 Index for 2006-07 was 23%. The S8 Index score will increase beyond the 2006-07 baseline as the State Plan is implemented. Use of the baseline information The data in this Baseline Report makes it possible to measure future changes in customer service improvement initiatives by agencies and across the NSW public sector, and for agencies to compare their progress with other like-agencies. Performance Review Unit Customer Service Baseline Report 6

4. Findings 4.1 Customer service operations, 2006-07 Customer service is a significant, important but often under-acknowledged profession in the NSW public sector. reported that 116,175 of their 256,449 full-time equivalent employees in June 2007 were front-line employees providing customer service. That is, almost half (45%) of the employees working in agencies were working directly with customers, providing customer services, or indirectly by providing services and systems that assisted frontline employees. There were major differences between small, medium and large agencies small agency respondents reported an average of one-quarter of their employees were involved in the provision of front-line services to customers. agencies reported that on average nearly one-third (32%) of their employees were frontline-related employees; with on average nearly half (46%) of large agencies had employees working in such roles. Table 2: NSW public sector customer service employees (FTE), 2006-07 All Total employees 4,948 9,144 242,357 256,449 Total customer service employees % customer service employees 1,252 2,945 111,978 116,174 25% 32% 46% 45% 4.2 Customer service improvement overview In 2006-07, before the introduction of the State Plan s priority to improve customer service, all NSW government agencies reported that they were funding some initiatives consistent with at least one of the customer service improvement principles. The extent of the involvement varied significantly across agencies. Five agencies reported they funded and carried out initiatives in 2006-07 consistent with each of the four principles. They were the Australian Museum, Board of Studies, Newcastle Ports, NSW Police Force and SOPA. Chart 1 shows the variety of customer service improvements that were reported as occurring in 2006-07 between agencies of different sizes. Performance Review Unit Customer Service Baseline Report 7

Chart 1: Customer service improvement initiatives, 2006-07 100% 90% 80% 70% 60% 50% 40% 30% All responses 20% 10% 0% Customer insight Re-design services Customise services Support frontline employees The following sections provide details on how the customer service improvement principles were implemented by the NSW public sector in 2006-07. 4.3 Inputs Whilst almost half the public sector reported it is involved in providing services to customers, the employee and financial resources dedicated to improving customer services is considerably less. reported having had a total of 3,106 full-time equivalent (FTE) employees who were involved in improving customer service. This represents 1.2% of the total workforce of responding agencies. However there was a considerable range between small and large agencies. The numbers of employees working on customer service improvement initiatives in 2006-07 extended from 8 FTEs on average employed in small agencies to an average of 58 FTEs employed in large agencies. Expenditure on improving customer services includes the costs of establishing customer satisfaction improvement mechanisms (such as the new expenditure on training, technology and administrative systems that is needed to set up or modify a complaints and compliments handling system), the expenditure on operating and maintaining customer service improvement systems, or both. Expenditure on improvements in customer service in the public sector in 2006-07 which includes surveys of customers, re-engineering services, customising services to meet the needs of individuals and communities, and supporting frontline employees was $534m. This represents slightly more than 1% of the total budget expenditure of all respondents. There were significant differences between small, medium and large agencies on the extent of their expenditure on customer service improvement. The 41 small agencies reported spending a total of $21.7m in 2006-07 on customer service improvements. This is an equivalent to a little more than half-a-million dollars ($530,141) per small agency. In this same year, the 15 medium agencies spent a total of $48.6m on customer service improvement initiatives, or an average spend of a little more than three million dollars ($3.2m) per medium agency. Performance Review Unit Customer Service Baseline Report 8

Table 3: Customer service improvement expenditure, 2006-07 All Total expenditure, service improvement initiatives $21.7m $48.7m $463.6m $534.0m Av. expenditure per agency $0.5m $3.2m $21.1m $6.8m The 22 large agencies reported spending a total of $463.6m on customer service improvement in 2006-07, or an average spend of a little more than twenty-one million dollars ($21.07m) per large agency. 4.4 Leadership and policies Leadership and customer service policies and practices are listed in Table 4. Table 4: Leadership and customer service policies and practices, 2006-07 All responses Executive level leadership 61% 80% 95% 74% Client satisfaction indicators in RSP or Strategy Customer Profile (statement of customer characteristics) Agency complies with AS 3906-2004 (Customer Expectations) Agency complies with AS 10002-2006 (Complaints Handling) 44% 67% 64% 54% 51% 67% 64% 58% 10% 13% 32% 17% 22% 27% 64% 35% Guarantee of Service 59% 53% 64% 59% Quantifiable standards of customer service Measures of customer satisfaction published publicly 51% 53% 77% 59% 49% 40% 64% 51% Performance Review Unit Customer Service Baseline Report 9

Executive-level leadership In total, three-quarters (74%) of all agencies in 2006-07 had an Executive-level officer with identified responsibility for customer or client satisfaction initiatives. This varies however depending on whether agencies were small, medium or large. Less than two-thirds (61%) of small agencies had an identified SES officer, 80% of medium agencies had an identified SES officer, and 95% of large agencies had an identified SES officer. Client satisfaction indicators In 2006-07, 54% of all respondents had client satisfaction indicators in their agency Results and Services Plans (RSPs) or in their Customer Service Strategy. agencies were below average, with 44% of respondents having indicators, whilst 67% of medium agencies and 64% of large agencies had indicators. Customer profile On average, 58% of all respondents had a customer profile. Interestingly 67% of medium agencies did so, whilst only 51% of small agencies and 64% of large agencies had a profile of the different customer segments for their services and/or the needs of the different customer groups. Chart 2: Leadership and policy, 2006-07 100% 90% 80% 70% 60% 50% All responses 40% 30% 20% 10% 0% Executive-level Officer Client Satisfaction Indicators in RSP Customer profile Compliance with AS 3906-2004 Compliance with AS 10002-2006 Guarantee of Service Published Standards of Service Use of Australian Standards There were two major Australian Standards that were relevant to customer satisfaction: Australian Standard 3906-2004 (Customer Expectations) and AS 10002-2006 (Complaints Handling Systems). In general, there was little use of Australian Standards by agencies in 2006-07. Only 17% of total respondents reported that they met Australian Standard AS 3906-2004 (customer expectations). In addition, only 35% of all agencies reported they complied with AS 10002-2006 (Complaints Handling Systems). Performance Review Unit Customer Service Baseline Report 10

There were clear differences however between the use of the two Australian Standards depending on the size of agencies. Some 32% of large agencies met AS 3906-2004 (Customer Expectations) and 64% of large agencies met AS 10002-2006 (Complaints Handling Systems) in 2006-07. Of the small agencies, by contrast, 10% reported complying with AS 3906-2004 (Customer Expectations) and 22% used AS 10002-2006 (Complaints Handling Systems). Guarantee of Service and Standards of Service Some 59% of all respondents published a Guarantee of Service in 2006-07. By comparison, nearly two-thirds (64%) of large agencies published their Guarantee of Service, 53% of medium agencies did so, and 59% of small agencies published their Guarantee of Service. Similarly, 59% of all respondents published quantifiable Standards of Service. A little more than three-quarters of the large agencies (77%) published their Standards of Service, whilst 53% of medium agencies and 51% of small agencies published this information. Publishing results of customer satisfaction surveys A little more than half (51%) of all respondents reported they published the results of their customer satisfaction surveys in 2006-07. Almost two-thirds (64%) of large agencies reported publishing their customer satisfaction measures; whilst 40% of medium agencies and 49% of small agencies reported they published their customer satisfaction findings. 4.5 Customer insight Researching customer expectations and their actual experiences with services is a key strategy to improve customer satisfaction with services. Table 5: Customer insight (average expenditure per agency), 2006-07 All agencies (a) Customer expectations of services Customer experiences of services $4,160 $42,210 $61,880 $37,330 $4,160 $7,890 $40,420 $19,960 Customer Feedback $4,370 $17,750 $581,480 $232,240 Benchmarking $520 $3,000 $9,840 $4,960 Note: (a) Based on the respondents that provided data for: customer expectations (74% of agencies), customer experiences (76%), customer feedback (73%) and benchmarking (73%). agencies tended to spend similar amounts of funding on communicating expectations to customers, identifying customer experiences and gaining direct Performance Review Unit Customer Service Baseline Report 11

feedback from customers. In 2006-07, small agencies spent an average of $4,160 on informing customer expectations; an average of $4,160 on collecting information on the service experiences of customers; an average of $4,370 on their customer feedback mechanisms; and an average of $520 per agency on benchmarking. On average medium agencies concentrated their expenditure on informing customers of the availability and standards of service they could expect. In 2006-07, medium agencies spent an average of $42,210 on informing customer expectations; an average of $7,890 on collecting information on the service experiences of customers; an average of $17,750 on their customer feedback mechanisms; and an average of $3,000 per agency on benchmarking. agencies spent an average of $581,480 in 2006-07 on gaining customer feedback, and an average of $61,880 on informing customer expectations, an average of $40,420 on collecting information on the service experiences of customers; and an average of $9,840 on benchmarking. In summary, when gaining insights into customer needs and priorities, small agencies tended to focus funding on gaining customer feedback; medium agencies tended to focus funding on informing customers of the expectations they could expect from the service; and large agencies tended to concentrate expenditure on strategies to gain customer feedback on their services. 4.6 Service redesign There are many different strategies that NSW agencies used in 2006-07 to redesign services as a way to improve customer satisfaction and outcomes. Customer service improvement was identified and integrated into agency governance, corporate and business planning, budget allocations and reporting. Existing services were better planned, targeted to their customers or focused on individual client groups. New data on customer needs, customer experiences and service outcomes were collected to ensure decisions on the service or program were evidence-based. New services were researched, piloted or established. Employees, especially frontline staff, were asked for their input into how service delivery could be improved. Technology was used to deliver the same service in better ways, or to support the provision of new services. Customers were better informed of what results they could reasonably expect, the processes that were involved in delivering the service and how they could contribute to successful service delivery, and were informed of how they could give feedback on the service. Program or service decision making was devolved to frontline employees so that most problems could be resolved directly with the customer. Performance Review Unit Customer Service Baseline Report 12

Budgets for low priority programs, or the less effective elements of programs, were reallocated to give a better customer service experience and better outcomes for customers. Integrating customer service improvement into agency governance includes ensuring the customer experience, feedback and outcomes is integrated into agency leadership, organisational culture, strategic planning, corporate and business planning, performance measurement, and reporting. In 2006-07, there was an average spend of $207,710 by all respondents on upgrading or new mechanisms to link customers and agency governance. There were significant differences between small, medium and large agencies. Interestingly, more money was spent on average by small agencies to integrate the customer perspective into their corporate governance than any other strategy. agencies on average spent $38,370 in 2006-07 to integrate customer service improvement into agency governance; medium agencies spent on average $261,090; and large agencies spent an average of $300,610. A second important way used by the NSW public sector to re-design services it to improve communication to and from customers. Interestingly, more money was spent on the communication strategy by medium agencies compared to the other service re-design strategies used by medium agencies: in 2006-07, medium agencies spent $594,470 on average on this form of service re-design. By contrast small agencies spent an average of $13,850 and large agencies spent an average of $635,640 on customer communication in 2006-07. On average, across all respondents, $378,530 was spent per agency on communications to and from their customers. The average expenditure in 2006-07 by all agencies on developing new or improved services was $207,882. Expenditure on this strategy also varied between small, medium and large agencies, with small agencies spending an average of $2,810; medium agencies spending an average of $44,690; and large agencies spending an average of $291,140. Evaluating services as an element of service re-design was most significant for large agencies. Whilst the average spend in 2006-07 on service evaluation for all respondents was $574,670, it was three times this amount ($1,451,860) was spent on average by large agencies; whilst medium and small agencies spent an average of $44,690 and $3,540 respectively. Performance Review Unit Customer Service Baseline Report 13

Table 6: Redesigning services (average expenditure per agency), 2006-07 Average Spend per agency (a) Integrating service improvement into governance Communication to/ from customers Developing new or improved services $38,370 $261,090 $300,610 $201,710 $13,850 $594,470 $635,640 $378,530 $2,810 $369,140 $291,140 $207,880 Evaluating services $3,540 $44,690 $1,451,860 $574,670 Note: (a) Based on the respondents that provided data on governance (77% of agencies), communication (79%), new or improved services (74%) and evaluation (73%). In summary, when re-designing services, small agencies tend to concentrate on integrating customer service improvement initiatives into agency governance, medium agencies tend to focus on improving communications to and from customers, and large agencies tend to concentrate on service evaluations. 4.7 Customising services Customising services involves ensuring that services were responsive to the needs and preferences of individual users, families and communities. In general, many large agencies are able to customise their services through the provision of concessions and other financial assistance to pensioners, disabled people, rural and remote customers and other client segments. This is less of an option to small and medium agencies that have developed innovative strategies to ensure their services meet the needs of individuals and communities. Tailoring services to meet the specific needs of individuals and communities was a major strategy of many agencies, reporting an average spends in 2006-07 of $887,790. agencies spent an average of $11,790 on these initiatives; whilst medium agencies spent an average of $199,000 and large agencies spent an average of $2,303,950 in tailoring services to individuals. Performance Review Unit Customer Service Baseline Report 14

Table 7: Customising services, average expenditure per agency, 2006-07 (a) Average Spend per agency (b) Services tailored to individuals and communities $11,790 $199,000 $2,303,950 $887,790 Services were accessible $2,510 0 $3,863,240 $1,467,140 Joint (multi-agency) services were provided Consumer choice was provided $5,120 $85,440 $8,180 $27,400 $2,900 $152,640 $3,245,570 $1,230,180 Services were provided equitably to disadvantaged people $2,760 $1,360 $4,339,740 (b) $1,567,339 Note: (a) Includes concessions and other funding provided to qualified recipients. (b) Based on the respondents that provided data: (78% of agencies), accessibility (74%), joined-up services (78%), consumer choice (77%) and equitably (78%). Improving the accessibility of services to rural, regional, mobility-impaired and other customers was a high priority for large agencies, but very much less so for small and medium agencies. In 2006-07, large agencies spent an average of $3.8 million to ensure their services were accessible, whilst small agencies spent an average of $2,510 and medium agencies did not report spending on these initiatives. On the other hand, medium agencies were leaders in providing joined-up, multiagency or one-stop shop services for customers. These initiatives increase the likelihood that customers can have access multiple government services in a coordinated and integrated way. In the case of collocated services, a customer case access several different government services in the same office. In 2006-07, medium agencies spent an average of $85,440 on multi-agency services, whilst small agencies spent an average of $5,120 and large agencies spent an average of $8,180. use various strategies to provide consumers a choice in how they receive services, for example, through face-to-face transactions, telephone, mail or the web. This was a significant strategy pursued by large agencies which spent on average $3.2m in 2006-07. agencies spent an average of $152,640 and small agencies spent an average of $2,900 in 2006-07. Providing services equitably is an important requirement of all public sector agencies. agencies often have a sliding scale of fees and charges which Performance Review Unit Customer Service Baseline Report 15

apply to different equity groups such as pensioners or families with small children. In 2006-07, large agencies spent on average of $4.3m on concessions and other strategies to assist members of disadvantaged groups in NSW. By comparison, small agencies spent on average $2,760 and medium agencies spent $1,360 in 2006-07. In summary, when customising services, small and medium agencies tend to concentrate expenditure on tailoring the different ways that services are delivered, whilst large agencies also assist customers by providing concessions and other financial assistance to groups such as pensioners. 4.8 Supporting frontline employees The fourth major approach to improving customer satisfaction and reducing customer dissatisfaction is to ensure frontline managers and staff had the delegations, systems, resources, skills and experience to deliver customer friendly services. Support for frontline employees begins with agency leadership, where the agency has a CEO or SES-level Executive with identified customer service improvement leadership responsibilities. In 2006-07, large agencies often had a senior executive with responsibility for customer service improvement, which was reflected in their allocation of funding to leadership: an average of $214,770. agencies and medium agencies expended less in 2006-07 on high level leadership that focused on customer service improvement issues, spending on average $50,610 and $26,610 respectively. Improved administrative systems contribute to frontline service delivery. These included agency IT systems to support service delivery employees; data collection systems that were effective, unobtrusive and provided useful information on customer segments, demand patterns and service use trends; and flexi-hours arrangements that supported customer-focused operations. Expenditure in 2006-07 on improving administrative systems was most evident by medium agencies which spent $308,700 on average; whilst small and large agencies spent on average $8,980 and $94,050 respectively. Being able to provide good customer service is supported by customer-oriented employee relations systems. Customer focused employee relations systems include having job descriptions which reflect the importance of giving professional service to customers; ensuring rewards and recognition were provided to employees (and teams) providing good quality customer service; and that there is a career path in the agency for officers with customer service experience. In 2006-07, medium agencies spent an average of $61,130 on human resource initiatives, whilst small and large agencies spent an average of $380 and $5,680 respectively. Good customer service also requires that the employees who provide the services to customers had specialised skills and experience. Performance Review Unit Customer Service Baseline Report 16

This can be encouraged through recruiting employees with specialised customer service skills and experience; ensuring front-line employees had the delegations to resolve most customer issues/complaints; and ensuring all frontline employees undertake regular professional development and training and had opportunities to act up as ways of increasing the communication, negotiation and conflict resolution techniques of frontline employees. In 2006-07, these frontline support strategies were most strongly supported by small, medium and large agencies, which spent on average $94,740, $444,450 and $712,610 respectively. Table 8: Supporting frontline employees (av. spend per agency), 2006-07 Av. Spend per Agency (a) Leadership 50,610 26,610 214,770 119,980 Administrative Systems 8,980 308,700 94,050 117,790 HR Systems 380 61,130 5,680 18,550 Front-line skills and resources 94,740 444,450 712,610 444,560 Employee participation 80 130 176,260 66,950 Note: Based on the respondents that provided data on leadership (77%), administrative systems (77%), human resource systems (73%), frontline skills and resources (76%) and employee participation (74%). Another important and effective contributor to good frontline customer service delivery is employee participation or empowerment. Frontline customer service delivering employees often know very well what the needs and priorities of customers are and they also know practical ways of improving service delivery. Customer service planning, management and evaluation can be improved by ensuring the experience and knowledge of frontline employees is integrated into agency planning and into service improvement initiatives, program and service redesign, the identification of professional development and training priorities, and office fit-outs. In 2006-07, small and medium agencies spent relatively little on these strategies ($80 and $130, respectively) whilst considerably more was spent on average by large agencies ($176,260). Performance Review Unit Customer Service Baseline Report 17

In summary, all agencies tended to focus on providing direct resources and skills to frontline employees. In addition, small agencies also tended to spend resources on providing customer-focused leadership; medium agencies tended to concentrate on improving agency administrative support systems; and large agencies focused on leadership and employee participation. 4.9 Measuring customer satisfaction Overall, 85% of agencies reported they measure customer satisfaction with their services and/or programs. The most frequently-used criteria to measure customer satisfaction in 2006-07 were: Timely delivery of service to customers (86%). Outcomes or results delivered to the customer (80%). Knowledge and competence of service providers (77%). Professionalism of employees (76%). Courtesy of treatment (76%). Fair treatment (64%), and Comfort of facilities (42%). There were similarities between different size agencies. Most large agencies (95%) measured customer satisfaction, whilst 92% of medium agencies and three-quarters (77%) of small agencies carried out some measures of customer satisfaction. Table 9: Criteria to measure customer satisfaction, 2006-07 All Responses Timely delivery of service to customer Professionalism of employees Knowledge and competence of service providers 78% 92% 95% 86% 75% 69% 81% 76% 75% 69% 86% 77% Courtesy of treatment 72% 69% 86% 76% Comfort of facilities 41% 46% 43% 42% Fair treatment 59% 62% 71% 64% Outcomes or results for customers Agency did not measure customer satisfaction 84% 62% 86% 80% 22% 13% 5% 15% Performance Review Unit Customer Service Baseline Report 18

Some agencies (44%) asked customers about the comfort of facilities as an indicator of customer satisfaction. In general, there were few differences in the use of customer satisfaction criteria by small, medium or large agencies. Chart 3: Measuring customer satisfaction, 2006-07 100% 90% 80% 70% 60% 50% 40% All responses 30% 20% 10% 0% Timely services Professional employees Knowledgeable providers Courteous treatment Comfortable facilities Fair Treatment Customer outcomes No measures 4.10 Customer improvement plans Most agencies (94%) reported they planned to carry out activities to improve customer satisfaction in 2007-08. There was no significant difference between agencies of different sizes. The planned actions were: Develop customer insight (90% of all agencies) Design services around customer needs (82%) Respond to individual and specific community needs (72%). Support employees to provide excellent customer services (86%). 5. Discussion All NSW public sector agencies reported carrying out some initiatives consistent with at least one of the four customer service improvement principles in 2006-07. The level of activity, when measured in terms of the expenditure, varied significantly between agencies. Only five agencies reported they funded and carried out initiatives in 2006-07 consistent with each of the four customer service improvement principles. They were the Australian Museum, Board of Studies, Newcastle Ports, NSW Police Force and Sydney Olympic Park Authority. An index has been developed to indicate the extent to which all NSW government agencies are implementing the four customer service improvement principles customer feedback, re-design services, customise services, and support frontline employees. Performance Review Unit Customer Service Baseline Report 19

The index is a weighted average of NSW public sector agencies that have completed funded initiatives for each of the four S8 customer satisfaction principles. For example, if every agency completed a funded customer satisfaction improvement initiative consistent with each of the four principles then the S8 Index would have a score of 100%. The data from this Baseline Report show that the S8 Index for 2006-07 was 23%. This score will increase as agencies implement initiatives to improve customer satisfaction with Government services. There are statistically significant differences between small, medium and large agencies in terms of their nature of their customer service improvement activities and the amount of human and financial resources allocated to the activity. This suggests a certain threshold in agency size is needed before agencies can allocate employees and funding to customer service improvement mechanisms and operations. Secondly the data suggest that when customer service mechanisms are established and operating, economies of scale make it easier for large agencies to resource customer service improvement. The implication of these findings is that innovative approaches to establish and operate customer service mechanisms are needed for small agencies: for example, where it is not financially viable for a small individual agency to fund a customer satisfaction survey, it could enter into an add-on arrangement with a large agency (where the large agency carrying out its own customer satisfaction survey would include some additional survey questions on behalf of the small agency) or establish a cluster arrangement (where a number of small agencies combined their limited resources to fund a joint customer satisfaction survey). The differences between small, medium and large agencies also suggest a onesize-fits-all approach to customer service improvement is inappropriate, and customer service improvement strategies need to be tailored to the circumstances of agencies. 6. Next Steps This Baseline Report shows the extent of customer service improvement strategies that were in place in the NSW public sector in 2006-07. It shows the variety of initiatives being undertaken across the sector, and will inform small, medium and large agencies as they implement customer service improvement practices. It also provides agencies with data to benchmark their own performance against similar agencies in the NSW public sector. The Baseline Report will also guide monitoring and implementation of State Plan. It will assist in monitoring agency performance and implementation of the customer service improvement principles in CEO Performance Agreements. Second, the Baseline Report will inform reports on customer service improvement progress and outcomes to the Premier and to Cabinet. It will also assist DPC to develop targeted customer service improvement initiatives for the public sector. Performance Review Unit Customer Service Baseline Report 20

Appendix: Survey Respondents Aboriginal Housing Office Ageing, Disability and Home Care Art Gallery of NSW Arts, Sport & Recreation Gaming and Racing Arts, Sport & Recreation Sport and Recreation Attorney General's Department Australian Museum Board of Studies, Office of the Casino Control Authority Commerce OFT Commerce OIR Commerce - Public Works Community Relations Commission Community Services, Department of Country Energy Delta Electricity Department of Health Department of State & Regional Development Education & Training, Department of Electoral Commission EnergyAustralia Environment and Climate Change Film & Television Office, NSW Fire Brigades, NSW Game Council of NSW Greyhound & Harness Racing Regulatory Authority Health Care Complaints Commission Historic Houses Trust of NSW Housing Hunter Water Corporation Limited Institute of Teachers, NSW Jenolan Caves Reserve Trust Judicial Commission of NSW Juvenile Justice, Department of Independent Transport Safety & Reliability Regulator Independent Pricing & Regulatory Tribunal Integral Energy Internal Audit Bureau Institute of Sport, NSW Lands, Department of Legal Aid Commission Local Government, Department of Lotteries Macquarie Generation Museum of Applied Arts & Sciences Newcastle Ports Authority Office of Children's' Guardian Parliament of New South Wales-Legislative Council Planning, Department of Police Force Port Kembla Port Corporation Premier and Cabinet Primary Industries, NSW Department of Public Prosecutions Public Trustee RailCorp Roads and Traffic Authority of NSW Rural Fire Service Rural Assistance Authority State Emergency Service State Property State Records Authority of New South Wales State Revenue, Office of State Water Corporation Sydney Catchment Authority Sydney Harbour Foreshore Authority Sydney Olympic Park Authority Sydney Opera House Sydney Water Teacher Housing Authority TransGrid Treasury Corporation Waste Service NSW Water and Energy WorkCover Authority Performance Review Unit Customer Service Baseline Report 21