Achieving cultural shifts and organisational agility to support

Achieving cultural shifts and organisational agility to support technology and business model change Presented by Jane King, Deputy Commissioner, Australian Taxation Office: February 2017

Mission Vision We contribute to the economic and social wellbeing of Australians by fostering willing participation in our tax and superannuation systems We are a leading tax and superannuation administrator known for our contemporary service, expertise and integrity Easy for people to participate Strategies UNCLASSIFED Contemporary and tailored service Goals • Build a culture that embodies our values and transforms the client experience • Simplify interactions, maximise automation and reduce costs • Connect with the community and other agencies in meaningful ways Purposeful and respectful relationships Professional and productive organisation • Influence policy and law design for more certain outcomes • Use data in a smarter way to improve decisions, services and compliance • Reshape the workforce and how we work, to optimise capability and performance 2

ATO fast facts In 2015– 16 Employed over Collected over $342 billion of net revenue Operated in 27 sites 20, 000 staff Our clients 577, 000 self-managed super funds 56, 000 tax professionals 1, 400 large and 190, 000 medium businesses 13. 4 million individuals 850, 000 trusts 905, 000 employers 2. 9 million small businesses Interactions 8. 5 million inbound phone calls answered 60% require authorisation 68 million visitors to ato. gov. au 5. 4 million my. Gov to ATO Online links 97% of tax returns lodged electronically 85% of activity statements lodged electronically

Reinventing the ATO ‘We’re looking to reinvent the ATO, to transform how we go about our core business, and make the ATO a contemporary and service-oriented organisation – to be a leading agency, relevant and responsive to the expectations of the community and government. ’ ATO COMMISSIONERS UNCLASSIFIED 4

Context setting – in the next 2 -5 years … Individuals will be dipping-in-and-out of “business” It will be easier for individuals to earn business income thanks to technology and new business models There will be fewer jobs There will be less traditional work and more new types of work Q? Geography and time become irrelevant for work as workers will be sourced at a global level The community will drive policy and increasingly circumvent government to bring about change UNCLASSIFIED A Technology giants and start-up companies will be major players in the financial market Computers will help people solve problems and provide financial advice without human intervention Households will be off the grid and powered by batteries. New technologies will change the face of power and its cost. Google 5

Delivering the future experience Reinventing the client and staff experience in the tax and super systems is underpinned by our cultural transformation. We will focus the delivery of this change through six strategic programs. UNCLASSIFIED 6

Types of organisational culture UNCLASSIFIED 7

Our emerging future culture Survey of the culture in the ATO provided the following traits Together, we designed, shaped and validated the characteristics of our future culture Bureaucracy Cost reduction Risk averse Individual accountability Client focused United and connected Organisational accountability Hierarchy Committed to service Silo mentality Diversity Empowered and trusted Future oriented Passionate and committed Lack of resources Balance (home/work) UNCLASSIFIED 8

Our cultural traits Transforming our culture supports our commitment for making our blueprint for change a reality. We will focus on the following new culture traits. Client focused We put clients, external and internal, at the centre of everything we do. UNCLASSIFIED United and connected We work as one team to deliver the right outcomes for the community. Empowered and trusted We are supported to take ownership, exercise judgment and make reasonable decisions. Future oriented We will be flexible and adapt to meet immediate and future challenges. Passionate and committed We are passionate about our role in serving the community. We bring professionalism, energy and determination to everything we do. 9

Reshaping Leadership strategy in summary 1. Reduce hierarchy Ø Redesign and de-layer leadership structure Ø De-emphasize hierarchy Ø Devolve authority 2. Narrowly define and deliberately develop broader leadership skills of technical leaders Ø Clarify the range and number of Technical leadership roles Ø Support Technical leaders to broaden their skills 3. Improve the approach to being a geographically dispersed organisation Ø Improve leadership in prioritised sites Ø Reduce Canberra-related SES travel and infrastructure Ø Improve communication infrastructure 4. Create leadership mobility Ø Strategically refresh leadership at all levels Ø Promote secondments and job rotation ATO Leadership Attributes 1. Dedicated to executing the strategies of the organisation 2. Outward-focused 3. Able to represent the Commissioner and able to influence 4. Collaborative 5. Empowering UNCLASSIFIED 6. Introduce promotion-readiness programs Ø Develop a promotion-readiness program for EL 2 s Ø Develop a promotion-readiness program for SES Band 1 5. Improve performance management of leaders Ø Increase direct performance feedback Ø Enhance the formal performance management system Developing Leadership 7. Improve leadership education and promote leadership as a career Ø Develop leadership pathways Ø Extend the current range of leadership education activities Ø Promote a culture of learning amongst leaders Ø Provide targeted training and skills development for individual leaders 6. High performing 7. Courageous 8. Effective in the midst of ambiguity 9. Lead by example 10

7 Characteristic of a successful Transformational Leader • Think different, Think big • Be vulnerable • Identify strengths and commit to making them better • Don’t just talk a good game, take action • Your role in transformation is a Privilege • Be watchful, don’t underestimate your impact • Don’t be afraid to correct/change your course John Mattone – Huffington Post UNCLASSIFIED 11

Effecting culture change requires transformation 1. Leadership and accountability What’s modelled 3. Rewards and consequences What’s expected What’s reinforced 2. Values and behaviours UNCLASSIFIED 5. Underpinning structures What’s habitual What enables 4. Practices and processes Who’s on board 6. Workforce 12

Driving transformational change Easy to comply, hard not to … UNCLASSIFIED 13

The blueprint for the future tax and super systems is being shaped through ongoing consultation and co-design with the community, stakeholders and ATO staff. Final design decisions will be influenced by factors including legislative direction and finance. Individual - Overview INDIVIDUALS For me, managing my tax and super is straight forward and I can access the services I need conveniently and at a time that suits me. These are the key features that will improve and transform the experience of the tax and super systems for individuals, making it easy for them to get things right and hard not to. Better services across government: Make it easy: An individual profile Behaviours and values from a segment perspective: Individuals know that their behaviour and choices will have consequences. If people do the right thing around their tax and super, their experience will be easier. If people choose to do the wrong thing, they can expect a firm response. My circumstances are understood: Tell us once I provide information to government once through my profile and government services are coordinated, to make it easy for me. Communications, interactions and service offerings from government are tailored to my circumstances and my behaviour. I know what I need to do and what I am entitled to. I can choose self-service options if I prefer. This means: • • • The community sees the value of engaging with government digitally, linking relevant agencies to their profile. Profiles and services are easily accessible across various devices and platforms. Clients can easily authorise others to act on their behalf via their profile, eg agent or spouse. Investment to support digital engagement for those unable or who need help to transition. Simple, secure access and information is stored in one place. The ATO uses information and technology to prevent issues with identity and refund fraud. The community protect their identity and personal information and expect advisors, service providers and government to do the same. • • • The community accepts information sharing across government where necessary for improved services or integrity reasons, and a law change will be needed. Investment in knowledge, technology and process to share information across government. Cooperation, collaboration and information sharing across domestic and international government agencies. Staff have a whole-of-government awareness for a client, where needed. The tax and transfer system is coordinated. Preferences for super funds are recorded once on an individual’s profile and pushed to employers. • • • UNCLASSIFIED Right tax at the right time: Easy to find clear and accurate information when needed, eg on ATO website, decision support tools – generally self-service but also the ability to communicate with someone if needed. Community acceptance of being pushed information to help them get things right, eg being informed they are approaching super contribution caps. If people get into financial difficulty, they can contact the ATO to discuss their circumstances and available options. Create an environment so people are confident that the ATO deals with unintentional mistakes in a sensitive and pragmatic manner. Staff are skilled in excellent service to get the right outcomes. Interactions are based on behaviour and choices, and when identified as abusing the system, individuals are dealt with firmly. A minimal touch: A personalised tax rate and withholding at source Tailored engagement and services I can engage with government and access coordinated government information and services through a single and secure digital entry point. My information and dealings are in one place. I know this profile helps me receive tailored services and saves me time. • ! A streamlined tax and super experience My tax and welfare position is adjusted through the year as my circumstances change to minimise end-of-year surprises. Managing my tax and super is simple as most of the information is provided by others, eg to prefill my return. The system is automated which minimises mistakes. This means: • • • Community values moving towards a more accurate tax position throughout the year, to minimise debt and refunds. Improvements to the Pay As You Go Instalments (PAYGI) experience. ATO proactively assist where there are obligations across multiple jurisdictions. To enable personalised tax rates, there will need to be uptake of digital solutions by withholders enabling event based reporting for tax and super, eg single touch payroll. Automated capability for ATO to calculate and notify personalised tax rates to withholders. Appropriate tax outcomes, including more accurate withholding, for people with multiple employers. • • Expansion of simplified my. Tax experience for all individuals. The ATO proactively informs individuals of deductions specific to their circumstances. Community acceptance of identity and data matching within government and entities. Law change to support information gathering/matching, timely reporting and/or later lodgment. Law change to facilitate minimal or low touch return experience, where appropriate. Expanded data matching. Capability to capture and pre-fill deductions and other details, eg rental properties. Certainty is provided around tax and super affairs in a timely manner. 14

Extract of ‘Every year counts for Individuals’ The blueprint outlines how the ATO is reinventing the experience you have in the tax and superannuation systems. Here are the key initiatives that will be delivered in 2016– 17 that you have told us are important: my. Tax for everyone who does their own tax return As an individual who completes my own return, I can use my. Tax to prepare and lodge my 2015– 16 tax return. More information New online features for my. Tax 2016– 17 I can record events and transactions for depreciation and capital gains tax throughout the year, to pre-fill my tax return. More information my. Deductions My 2015– 16 tax return will be pre-filled with the deductions I have captured in the ATO App. • I can capture more deductions in the ATO App in 2016– 17 e. g. income protection insurance premiums More information • Pop-up service centres I may be able to visit an ATO pop-up service centre in my local community to receive help in using ATO products and services. JUL *Delivered with Department of Human Services AUG SEP OCT New ways to get assistance online when using my. Tax I can chat with an ATO staff member through web chat. • If I need help, I can share my screen with an ATO staff member so they can see what I can see, to quickly resolve my issue. • NOV DEC JAN UNCLASSIFIED Improvements to my. Gov* I can now use my email address as my username for my. Gov. More information Expansion of certainty letters My agent or I may be told that my income tax affairs for the past year will not be subject to further review. This means I have certainty that my tax affairs for that year are complete. 15

Key changes to meet client needs The future client experience will deliver contemporary products and services that are focused on client needs making it easy to get things right and hard not to. We will fix the basics, foster confidence and trust by acting with integrity, providing certainty, tailoring interactions to taxpayer needs, and help them to navigate the tax and super system. Further client experiences will be explored over time. INDIVIDUALS SMALL BUSINESS PRIVATELY OWNED PUBLICLY LISTED AND WEALTHY BUSINESS GROUPS REGULATORY FUNCTIONS NOT FOR PROFIT: CHARITIES INTERMEDIARIES: TAX AGENTS INTERMEDIARIES: SOFTWARE DEVELOPERS SUPERANNUATION: EXCISE PAYERS APRA REGULATED SELF-MANAGED SUPER FUNDS Better services across government through an individual profile to deal with government online and in a single place. Better services across government through a single and secure entry point to online government services. The value of conversation through excellent working relationships with the ATO. Better services across government with a single and secure entry point to online government services. Partners in the tax and super systems through excellent working relationships with the ATO, and acknowledging agents’ collective role in improving compliance. Partners in the tax and super systems by implementing solutions that make compliance with tax and super systems a by-product of core business activities. Make it easier with digital and seamless interactions. Make it easier through a single entry point to access information and services. Trusted to manage obligations by being approved to operate and manage highly valuable commodities. Make it easy by telling government once and knowing government work together to improve services. Make it easy by telling us once. Getting what I need when I need it with access to the right services for each circumstance. Our contribution is recognised with customised service for Australia’s largest taxpayers. Strong confidence in the sector through a transparent public register that provides integrity in the system. Adapting to change with an evolving business model that reflects broader environmental changes. Adapting to change by understanding and responding to the ongoing broader environmental changes. Better services across government by telling us once, through natural processes. More time to grow my savings by having integrated digital solutions which save time. Make it easy by telling government once, through natural systems where possible. My circumstances are understood with tailored engagement and services based on behaviour and choices. More time for business through integrated digital solutions between ATO, tax agents and business. By being open about my affairs, I know where I stand the transparency of affairs allows the ATO to help clients and tailor services. We know where we stand through regular and purposeful engagement. More time to run my charity by having the right services when needed. One place to interact with a single and secure entry point for online government services and information. Make it easier with software solutions that seamlessly interact with the ATO and government. Getting what I need when I need it so information and advice is timely and tailored to circumstances. Minimise red tape through streamlined reporting and administrative processes. More time for getting on with business by managing obligations through integrated digital solutions. Right tax at the right time through a personalised tax rate and withholding at source. Getting what I need when I need it with service anytime. My circumstances are understood with tailored engagement based on tax risk, including behaviour and choices. Our circumstances are understood with tailored engagement based on business size, complexity and behaviour. My circumstances are understood with tailored engagement that includes timely, proactive services. Make it easier with integrated practice software which links to client’s software and the ATO. Shared journey by understanding operating environments and working together to capitalise on opportunities. The value of conversation through excellent working relationships with the ATO, resulting in good outcomes. My circumstances are understood, allowing tailored engagement as a result. Getting what we need when we need it by having services available anytime. A minimal touch through a streamlined tax and super experience. My circumstances are understood with tailored engagement based on circumstances, behaviour and choices. My circumstances are understood with tailored engagement based on circumstances and client preferences. Right people, right time allowing for tailored engagement. UNCLASSIFIED Our circumstances are understood allowing for tailored engagement. 16

Key changes to improve the staff experience The future staff experience helps our staff to develop the capabilities and expertise required to succeed and to focus on delivering a contemporary client experience. TEAM MEMBER Major areas of change for our staff Support for our staff through change TEAM LEADER SPECIALIST SENIOR LEADER Feel trusted Build trust Trusted source Champion trust Embrace growth Encourage growth Create growth Drive growth Achieve excellence Drive excellence Define excellence Supported to perform Supported to lead Supported to perform Lead change • Clearly defined career pathways, mentoring and mobility opportunities. • Clear • An • A • Tools • Recognised physical and digital environment suited to staff needs. • Effective leadership programs. • Opportunities for development that align to business needs. • Tools to support innovation, knowledge transfer and social collaboration. communication of leadership expectations at all levels. and access to the right people, resources and information to do their work. • Supported to enhance leadership skills through structured development programs. • Acknowledged and supported to have quality, frequent discussions with staff as appropriate. accountability strategy that defines responsibilities and expectations. as a trusted source and respected for their expertise • Tailored secondment and rotation opportunities within specialist fields. • Supported to expand enhance professional and peer networks. • A knowledge transfer process and tools to share expertise and experience. • A process to ensure leadership is visible and the right connections to information and people are made. • A process to ensure senior leadership is visible through the right networks. • A performance system that supports senior leaders to set clear expectations and reward good behaviour. • Identify and develop staff with senior leadership potential and build capability.

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Where the business model fits The business model project Other Supporting strategies trate s g n i ort Supp l egic Strat t inten Vision, Mission, Goals, Strategies, Outcomes, Blueprint B ode ss M e n i s u nal isatio rgan ring o Endu roposition alue p v. Value for Government, W hat nee clients community, d success s to be done to fu strategic lly deliver on th e intent C Digital entred lient-C Insight-D Working T ogether ted Guide d Ass People Techn uranc e Othe r UNCLASSIFIED rams Prog igital rary D mpo Conte s e ic v r e S Smarter D rtners Channel Agility Integra ating Oper el mod ata Sourcing riven Downstream input ology Working with our pa Tailored Engage ment and Support Operations Optimis ed Work force Capabil ity and Culture Gove rn and E ance, Des ign valua tion 20

Achievements …to 21 November 2016 2. 5 million voice prints enrolled 1 million virtual assistant conversations with 79% successfully resolved 71, 000 my. Gov accounts linked to ABNs 64, 000 web chats offered and nearly 6, 000 screen shares 3. 1 million my. Tax lodgements 93% of refunds issued by EFT 5. 4 million my. Gov accounts linked to ATO Online 9. 5 million messages sent to my. Gov Inbox 1. 2 million ATO app sessions 41% of paper products retired or moved online

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