The Government says the Ministry of Business, Innovation and Employment is proving to be effective, despite some teething issues.
The State Services Commission had delivered a scathing report on the performance of the Ministry two years after it was created by merging four government departments.
The commission's first performance review of the Ministry said the ministry had significant external and internal problems.
It said the ministry needs work, its human resources (HR) systems were an irritant to progress and it had weak leadership and governance.
Out of 32 areas of review, the commission dished out 27 ratings of 'weak' or 'needing development'.
Economic Development Minister, Steven Joyce said the report was started at the beginning of this year, just 12 months after the Ministry was formed.
He said the super-ministry was an asset to the public sector and was getting stronger every month.
"It's a very big project, for constituent agencies of at least two were struggling with a range of issues, including things like their finance systems and their IT systems.
"And so it was always an element of fire-fighting to make sure that all the projects the agencies were involved in kept going, and I think they've done that pretty well really."
Areas the ministry rated weak in include leadership and governance; leadership and workforce development; improving efficiency and effectiveness; financial management and risk management.
Aspects deemed to need development ranged from leading economic growth (the core reason the ministry was set up) to engagement with ministers.
The best results were five 'well placed' ratings for purpose, vision and strategy; asset management; public experiences; Crown Entity monitoring; and supporting the business and innovation system.
The ministry was awarded no 'strong' ratings across any of the categories of the review, which took place in late January and early February 2014.
The Ministry of Business Innovation and Employment (MBIE) was established in July 2012 by merging four significant government departments. It employs about 3000 staff and reports to 14 ministers.
Last year its chief executive David Smol won Trans-Tasman's CEO of the year award. He earns between $620,000 and $629,000.
The review said MBIE's policy creation was not coherent, that its advice was not consistently meeting ministers' expectations, that its Senior Leadership Team struggled to be the "sum of its parts", and there was a high level of frustration among managers.
The review's authors stressed that MBIE's performance was adequate but said there were "concerns for future performance".
The senior leadership team (SLT) was not appointed until six months after the department's creation and struggled to work cohesively together to "deliver more than the sum of its parts".
The report said those in the leadership team were "very able" but had been "stretched multiple ways". In an internal survey, the leaders ranked lowest by staff on their ability to communicate the direction the agency was going, and ensure change processes were managed well.
Significantly, the report said the SLT was getting bogged down with trivial, but essential, details.
"[The] SLT must find ways to put hygiene matters, especially financial and other management reporting and basic issues with servicing ministers, to bed as quickly as possible to maintain a consistent focus."
Because those issues were occupying the SLT's focus, it said MBIE's "ambitious targets" could not be achieved unless the leadership team could have its collective vision firmly on the horizon.
Roles and accountabilities at the ministry remained unclear, and the senior leaders were urged to start modelling an improved organisational culture.
Relationships with ministers
One of the core functions of MBIE is to provide cohesive and future-focused policy advice to the Government.
The average rating ministers gave to its policy advice was 7.1 out of a possible 10 and the report's authors expressed concern about the "variable service across ministerial portfolios".
They said ministers were having to chase MBIE to find out who to speak with about their own portfolio.
"This is evidenced by a perception that the responsibility for manoeuvring across different parts of MBIE is now the responsibility of Ministers, rather than MBIE presenting with a senior leader who can deliver all of the relevant parts of MBIE to each portfolio Minister.
"This has not been helped by significant staff changeover and the time taken in developing strategic frameworks, priorities and subject matter expertise."
To fix that, the ministry needed to provide each minister with a senior leader, it said.
Organisational management: an 'irritant' to progress?
The report said HR and organisational development issues were taking too long to resolve and were frustrating for both staff and managers.
It said turnover, especially of staff with less than two years' tenure, was high, which made it very challenging to gain traction on workforce initiatives.
Moreover, those challenges had been exacerbated by weak HR management information systems, which it called an "irritant to overall progress".
Systematic leadership development for middle and frontline managers was not in place, and MBIE as a whole lacked the ability to prioritise effectively, the report said.
However, that did not mean the ministry had employed the wrong people, or that the skill was not there.
The report said highly motivated and capable staff were "doing things the hard way" because they were struggling to prioritise their efforts and to see the broader strategic context for the work.
As a result, MBIE's HR, Finance and ICT costs were well above comparable agencies, and its management capability was barely 'achieving'. There were also high levels of frustration amongst managers.
"Not only are there serious deficiencies in the basic information available to them, they are not confident about when these deficiencies will be addressed," it said.
The report notes that some of the issues raised began to be addressed in the time it took for the review to be released.
Business New Zealand and the Labour Party say the [Business New Zealand and the Labour Party say the [ http://www.radionz.co.nz/news/political/262359/super-ministry-problems-'inevitable'
problems in the first two years of the ministry were inevitable].