Part 4: Increasing capability

4.1
In this Part, we discuss:

• Kia renarena, the Ministry's organisational change programme;
• the Ministry's work to strengthen its leadership capability; and
• the Ministry's approach to relationship management.

4.2
We expected to see the Ministry:

• focusing on leading the system as it moves from setting a strategy to delivering on that strategy; and
• focusing on developing the skills to influence behaviour change.

Summary of findings

4.3
The Ministry is doing work to improve its system leadership capability through Kia renarena, its organisational change programme. If implemented well, and kept under regular review, it will enable the Ministry to lead system change as it delivers on its strategic outcomes.

4.4
The Ministry is starting to take a more deliberate and strategic approach to managing its relationships with stakeholders. This work will help it to influence improvements to the system's performance.

4.5
Although it makes sense to prioritise relationships, the Ministry also needs to be clear with other stakeholders about the level of engagement and type of relationship that they can expect from the Ministry.

The Ministry has started an organisational change programme

4.6
In June 2021, the Ministry started an ongoing organisational change programme called Kia renarena. It is designed to identify and make changes to how the Ministry works and to improve its system leadership capability.

4.7
Kia renarena identifies six elements that the Ministry needs in order to carry out its system leadership role, including improving its understanding of the system and making change through collaboration and partnership.

4.8
Kia renarena also identifies five strategic changes and three operational changes that the Ministry needs to make to carry out its role and achieve its priorities. These changes include setting clearer connections between the Ministry's strategy and its operational decisions and building the Ministry's capability and capacity in priority areas.

4.9
In November 2021, the Ministry stated in Kia renarena that:

… our system-focused activities can sometimes be reactive, are spread across different parts of the organisation, and lack both the capacity and capability needed to ensure our work is strategy-led. This has resulted in missed opportunities and fragmented decision making on what's most important for the system at any one time.

4.10
The Ministry is carrying out several projects as part of Kia renarena. Many of these projects focus on improving the Ministry's ability to lead the system. In our view, there are two projects that could help the Ministry improve its oversight and leadership of the system. These projects are:

• setting up a Ministry group with a dedicated system focus; and
• embedding a new leadership framework.

The Ministry set up a dedicated group for its system leadership role

4.11
In February 2022, the Ministry set up the Intelligence and System Direction Group.

4.12
The role of the Intelligence and System Direction Group is to identify priorities for the system, play a co-ordinating role throughout central government to ensure that initiatives that affect housing and urban development are aligned, and identify and prioritise the Ministry's efforts.

4.13
The Ministry created three new teams in the Intelligence and System Direction Group:

• System Insights and Strategy;
• System Policy; and
• Place-based Strategy.

4.14
This is the first time that the Ministry's system-focused functions and activities have been brought together in a group with a dedicated system-wide focus.

4.15
The Ministry told us that it has now built the Intelligence and System Direction Group's capacity, and will continue to review the capability of the Group. This is encouraging. In our view, when this is fully embedded, the Intelligence and System Direction Group's focus on system priorities and co-ordination will make it well positioned to understand emerging risks and opportunities throughout the system. It should also enable the Ministry to maintain better oversight of the system.

The Ministry is embedding a new leadership framework

4.16
Because the Ministry cannot direct other public organisations to act, it needs leaders with strong influencing skills to make system change.

4.17
In 2021, the Ministry acknowledged that aspects of its leadership needed to improve:

In our current [Deputy Chief Executive] roles the time and space involved in working ‘on the system' is often challenged by getting pulled into the ‘doing' both at a system and organisational level.

4.18
As part of Kia renarena, the Ministry set up a new leadership framework. Under this new framework, deputy chief executives are accountable for leading the system. This responsibility includes leading change throughout the wider public sector and influencing decisions and issues of significance to the system to achieve the intended strategic outcomes.

4.19
The Ministry also increased leadership expectations of its third-tier roles (for example, general managers, heads of functions, and partnership directors).

4.20
In our view, these changes will improve the Ministry's ability to carry out its system leadership role. Senior leaders will be able to develop a better understanding of how the system is working and what needs changing. They can also use this information to influence the way the Ministry and their partners work so that the system provides better housing outcomes.

4.21
As the system evolves and actions to start addressing challenges with housing and urban development start to take effect, the Ministry and relevant organisations need to ensure that systems and processes remain fit for purpose. We note that the Ministry is required to review the Government Policy Statement every three years. In our view, at the same time, the Ministry should continue to regularly assess whether its systems and processes are operating as intended and whether there are capabilities that need further improving to support its work to lead the system.

Approaches to relationship management are maturing

4.22
System leadership relies on influencing other organisations. This requires strong, trusting working relationships with groups and organisations involved in housing and urban development.

4.23
In particular, the Ministry needs to:

• influence others to better improve housing outcomes for New Zealanders, such as by making land available for housing;
• gather information and co-ordinate actions throughout the system; and
• understand the support that it needs to provide to help other organisations do their jobs well.

4.24
When we conducted most of our fieldwork in 2021 and 2022, the Ministry's engagement was largely driven by the priorities of individual initiatives that it was responsible for leading.

4.25
Some people we spoke to were positive about this engagement. They told us that the Ministry had successfully linked the organisations that were involved in the Aotearoa/New Zealand Homelessness Action Plan (2020-2023), and that it had led some of its actions and responses well.

4.26
Others told us they felt that the Ministry was prioritising the delivery of initiatives rather than system leadership activities (such as co-ordinating actions, understanding the performance of the system, and looking at the longer-term issues). They were confused about the Ministry's role in the system.

4.27
Throughout 2022, the Ministry started to take a more deliberate approach to stakeholder management. It identified its "Top 16 critical stakeholders", which included key delivery partners and cross-government relationships. The Ministry's senior leadership team is now responsible for doing regular "health checks" on these relationships and sharing insights from stakeholders.

4.28
The Ministry identified that it needed to form strong relationships with particular groups and organisations involved in housing and urban development. This is necessary to ensure that its work is informed by intelligence about what is happening in the system, and that it is well-placed to form partnerships to deliver key projects and programmes.

4.29
The Ministry is working to clarify the focus and objectives of its relationships with the 16 critical stakeholders and is preparing relationship management plans that define the frequency and type of engagement for each critical stakeholder. The Ministry set out formal expectations for some of these relationships. For example, the Ministry has a Letter of Understanding and Commitment with Community Housing Aotearoa, and a Memorandum of Understanding with the Reserve Bank of New Zealand.

4.30
The Ministry told us that other relationships tend to be more focused on specific issues. For example, in local areas (such as in Hastings) the Ministry is carrying out its place-based approach, and for its Urban Growth Partnerships the Ministry has relationships with relevant councils, iwi and Māori, non-governmental organisations, and other central government agencies.

4.31
In our view, the Ministry is making progress towards a more deliberate and strategic approach to managing its relationships. For the next phase of this work, the Ministry could usefully ensure that all groups and organisations involved in housing and urban development understand what level of engagement and type of relationship they can expect from the Ministry.

4.32
We encourage the Ministry to regularly assess its stakeholder management approach to ensure that it supports the Ministry's responsibilities for delivering work programmes and providing system leadership, including the health of the Ministry's relationships with its critical stakeholders.