New Productivity Commission chair Ganesh Nana downplays difficulties at the board level, though an HR report makes it clear that staff saw things differently. Photo / Mark Mitchell
The Productivity Commission delivered a new inquiry into immigration last month, at the same time that it is facing its own story of migration: an exodus. It involves a string of departures that have not yet been stemmed by an independent HR investigation and a slew of recommended remedies.
A distinct wave of resignations began in February last year, when two of the independent Crown entity's principal advisers left. In subsequent months they were followed out the door by six more staffers, including two lynchpin managers, each of whom had been directing one of the commission's two inquiries of the time. The eight departures in 2021 made up more than half the commission's 15 employees (the head count as of January 1, 2021, including one part-timer).
An HR review called late last year found problems at the commission including a troubled transition under the leadership of Ganesh Nana, who became chair on February 1, 2021. It also found an uneasy relationship between the new chair and many staff, especially senior ones. While efforts to improve staff retention are underway, at least four more employees have resigned from the commission in the first half of this year. Of the senior leadership team described in commission documents at this time last year, only one of the five remains.
In addition, reports of divisions at board level have been underscored by the early and unexplained departure of commissioner Andrew Sweet in March, two months before his term was to end. Also leaving is commissioner Gail Pacheco, who did not seek reappointment for a second term. Pacheco has agreed to remain temporarily past the end of her term, which expires at the end of the month, in order not to leave the board without a quorum (Sweet's departure reduced the board to three).
The Treasury is running a selection process to replace Pacheco, but a replacement is not expected to be in place by July 1, and the commission's enabling legislation requires a minimum of three board members for decision-making.
Sweet and Pacheco both declined to comment on the reasons for their departures.
By November last year the losses, especially of senior staff, were so great that Judy Kavanaugh, an inquiry director and long-tenured commission employee recently returned from secondment, wrote to the board in dismay.
By that point six research staff had either resigned or were about to, including the commission's two acting inquiry directors, Nicholas Green (Immigration Inquiry), and Joanna Smith (Fair Chance for all Inquiry).
"These resignations should be of concern to the Board," Kavanaugh wrote in a letter which has been supplied to the Herald. "Section 50(a) of the Crown Entities Act requires the Board to ensure an entity performs its functions efficiently and effectively.
"It seems obvious that any further resignations (or the retirement of senior staff) before we have a chance to recruit and settle new people, will leave us at serious risk of not having the core capability to fulfil our functions. I also fear this will put undue pressure on existing staff and undermine morale, with the potential for further losses," Kavanaugh noted.
She worried about the commission's ability to recruit in a very strong labour market, and also that any "further loss" of "our human capital could lead to an unravelling of the social capital that binds us and defines us" as a commission.
While the commission also experienced quite high staff turnover in 2020, when five full-timers and one part-timer left, the circumstances of the 2021 attrition were more worrying.
"I hope that the Board will take the time to consider what happened here. And I hope the Board is willing to explore what role it may have played," Kavanaugh wrote.
When the Kavanaugh letter landed, the board was made up of: Sweet (a former public servant and director of consulting firm Firecone NZ); Pacheco (professor of economics at Auckland University of Technology and director of the NZ Work Research Institute); Bill Rosenberg (policy director and economist at the NZ Council of Trade Unions); and Nana, as chair, who was previously chief economist and research director at BERL, a consultancy favoured by the Labour Party under Nana's leadership. He ceased to be a shareholder in May, 2021 according to the Companies Register. Current BERL Director Hillmaré Schulze said the consultancy now strives to be politically neutral.
The board hired HR consultancy Impetus to review the employment situation at the commission and interview employees, both current and many of those who left in 2021, including: general manager Damian Smith, who left in August; Ron Crawford, who resigned in February but continued as a contractor; and exit interviews were conducted with five staff who resigned in October and November, including Smith and Green (the acting inquiry directors).
That report, provided to the Herald under the Official Information Act, found a range of push and pull factors underlying the employee departures. The very strong job market and skills shortage were the primary pull factor.
Push factors presented a knottier puzzle. The report's executive summary noted that the commission was in "a phase of transition with a new Chair, broader expectations from the Minister and a shift in the make-up between long serving and new staff. This has not been an easy transition."
The report also made it clear that the board's role, and Nana's part in particular, played a considerable part in the upheaval.
Under the heading "staff engagement with the Commissioners", the report found: "With two Commissioners being relatively new, a greater level of presence and interaction with staff, both formal and informal, would help build the relationship to support communication and the interchange of information and ideas. This is especially important for the Chair, with some staff having limited understanding of how he sees his role and what he brings, both as an economist and as a person."
The relatively new commissioners were Nana and Rosenberg, who joined the board in 2021 and 2020 respectively.
Of the staff who spoke to the Herald, many elaborated that they found Nana's economic and analytical input to their work "light weight" and his manner detached and awkward. They said Rosenberg was distant, and he was repeatedly described as "ideological" and set in his thinking.
The Herald spoke to close to a dozen people employed by, recently departed from, or otherwise close to the commission, on condition of anonymity. All of the sources for the story work in or close to the public service and feared that speaking up would be career limiting. In quoting "staff", the Herald includes both current and recent employees.
Rosenberg told the Herald the commission was concerning itself with "new sources of evidence, and new ways of using it" and it was "lazy to describe that as 'ideological'".
In an interview, Nana said he "accepted responsibility for the findings of the report and for implementing the recommendations". He also accepted that staff wellbeing had not been a sufficient focus for him last year. "It wasn't by design and it wasn't by lack of effort and yes, I do put the wellbeing of my staff quite high on my agenda absolutely. And I remember saying that really early on to all staff, but clearly what panned out hasn't panned out as I would have liked and I again take full responsibility for it and take on board the recommendations to change and shift and do things differently."
But at times he was equivocal about his role in the staff departures. Was he aloof or distant from staff concerns? "I find that very hard to believe when I tried to make myself open to staff and make myself open to the offer to help and I have offered to help with the needs and all of their work, but I had to acknowledge lines in the sand that I didn't want to step over in terms of impacting on other staff's responsibilities."
Nana also downplayed difficulties at the board level, though the HR report makes it clear that staff saw things differently. "Staff do not see the Board operating as a unified entity. There are tensions within Board relationships that need to be resolved to enable the Board to demonstrate collective responsibility and provide a consistent view to the staff," it found.
Many of those who spoke to the Herald described what they believed was a deep rift between Nana and Rosenberg on one hand and Sweet and Pacheco on the other.
Nana said a "rift" was "probably a wrong description". He said there were, "disagreements at the board level but I wouldn't have thought those were anything peculiar to this board".
Rosenberg said board members had had different views on how inquiries should proceed, but he didn't see those differences as deep divisions.
Despite this, the HR review recommended "using external assistance to resolve board differences and improve relationships between members".
The review contained no examples of behaviour or disputes and it noted that the small number of individuals involved and the broad range of views meant it was difficult "to specify and group the drivers and concerns of people without compromising their identity".
But several of those who spoke to the Herald noted that at various times in 2021 staff overheard "heated arguments" and "raised voices" between Nana and Sweet, and at board meetings more generally.
Staff also told the Herald they tended to confide in Sweet and Pacheco about their difficulties in dealing with Nana and the board as a whole.
One example of such difficulty involved an idea proposed by the team working on the immigration inquiry. Staff hoped to engage well-known economist Michael Reddell (formerly of the Reserve Bank and now a blogger and commentator) and Eric Crampton, chief economist at the NZ Initiative. The idea was to have Reddell set out his position on immigration: broadly, that high migration to New Zealand has resulted in low growth in GDP per capita, over-burdened infrastructure; and has drawn labour and investment away from more productive industries by creating excess demand for assets such as houses. Crampton, who takes a different view on immigration, would be asked to critique Reddell's position.
In response to this plan, Nana sent an email "from down the hall", disallowing staff from pursuing the idea. The decision was that of the board, Nana wrote. At the same time, said one staffer, he kept to his office with the door closed, "huddled away like a hermit".
Nana's tendency to keep a closed door for periods through 2021 was cited by many unhappy staff. Nana, however, said it was not his practice: "that particular critique I would push back against quite strongly. My door is always open unless I'm taking a phone call," he said. However, he noted that as a result of the HR report he has moved to an office on the other side of the building to be closer to staff.
Another concern staff emphasised was the departure of Smith and Green in the midst of their respective inquiries. Nana said there was "little he could do in light of the departures", as Smith and Green were both leaving for other jobs. He said he had made efforts to retain them. However Smith and Green both departed the commission only after it became known that their jobs, which each held in an "acting" role, would be advertised and filled through a competitive process.
Questions concerning both departures were also raised in the Kavanaugh letter, which asked whether the pair were given certainty about what was to happen to their positions in a timely manner. And whether either one was identified as a "flight risk", and what efforts were made to retain them?
Smith, who joined the consultancy Martin Jenkins, was subsequently hired back by the commission for more than three months at a significantly higher consulting rate, to continue leading the Fair Chance inquiry while a replacement for her was found.
Nana described the move as "practical". But given the circumstances of Smith's departure, several staffers said the additional expense was referred to around the office as an "idiot tax".
Ironically, given the commission's new mandate to redouble its focus on New Zealanders' wellbeing, many staffers said such concern was often absent in their own working world. They felt that Nana and Rosenberg viewed them as "expendable", and in the words of one staffer, as "fungible units of labour".
Rosenberg said he was, and remains, concerned about staff welfare, though he described 2021 as an extraordinary period in which other work commitments and Covid meant his office time at the commission was reduced.
"I'm an active trade unionist ... I abhor attitudes that see people as resources," he said. He noted that the board was now working to more actively build relationships with staff, albeit that the requirements of governance would always require a degree of distance.
Some staff felt the HR review did not adequately reflect the interviews they'd given, especially the strength of their emotions. "I cried through the whole interview," one said. Another described being surprised and overwhelmed by the strength of reaction the interview gave rise to: "I just felt this surge of rage".
The review also highlighted the tensions that began to develop almost as soon as Nana's appointment was announced.
When Nana introduced himself to staff at the commission offices in December, 2020, before taking up his new post, he vowed to usher in a new approach to understanding productivity that did away with the old models, and to do better at providing work aimed at raising up the dispossessed.
The review found that most senior staff had been "negatively affected by their perception that the new Chair did not value the past work of the Commission and, by association, them".
"They are concerned that the Commission will lose its reputation for producing independent high quality work," it said.
Of those who spoke to the Herald, many referred to the December introductory meeting. They said Nana seemed "unaware of" and "not to have read" the commission's work even as he articulated a view that the organisation "needed to be fixed".
Last year was marked by a new directive for the commission from Finance Minister Grant Robertson. He asked the organisation, which provides independent advice to the Government on productivity, to bolster its efforts at looking beyond "traditional measures of economic success" and to place more focus on wellbeing.
Last week Robertson said he had received a summary of the HR review and had been briefed by commissioners on its contents. He noted that the commission had been able to hire new people since the review and confirmed that Nana continues to have his "full confidence".
Robertson also implied that his changed emphasis for the organisation, "may influence people's views of working at the commission".
The HR review, however, suggested the changed emphasis was not a factor in staff leaving. "There is an openness and a willingness amongst staff to support change, though there is a lack of clarity on what this looks like," it said.
Nana said the commission was now in the midst of implementing more than two dozen recommendations from the HR review. These include: newer commissioners spending more time among staff and encouraging discussion; commissioners engaging with inquiry directors, once appointed, to clarify their roles, responsibilities and expectations; and greater emphasis on competitive pay packages and career development.
But the rate of departures has not eased. Four staff (a mix of relatively new hires and those with longer tenure) have left in 2022, putting the commission on track for the same level of attrition as last year. Among the recent departures was Judy Kavanaugh, who voiced her concerns to the board last November.
Nana accepted that it "looks bad on the face of it, it's not an ideal situation", but some of those staff had been outright poached by other organisations, he said, and he was "heartened by the quality and quantity of applicants" for vacant positions.
While Nana has so far struggled to demonstrate that his strategy for the commission is significantly different from that which went before, he has emphasised that it would be folly to expect results in the short term. Finding a way to move beyond the churn and tumult of the past 16-months will also be critical if Nana is to put his little agency on the footing it needs to achieve long-term relevance.
Industrial projects dominate new supply, the study found, comprising 65% of new stock.