Management What’s Driving Local Government’s Management Revolution?

Times were when the grey cardigan image of management job in local government was hurdle for recruiters. Now, it seems, times have changed along with the image. And even though the pay rates at the top hardly equate with those paid in either private sector or even central government, talented individuals are signing on and driving change.
A management revolution has been going on inside local government for the past 10 or so years. Now, the results are showing through and the transition is reaching point where stint in local government management is worth including on manager’s personal cv.
Local authorities are, for instance, entering management best practice programmes like the New Zealand Business Excellence Foundation’s Business Excellence Awards and performing well in them. Last year the Auckland Regional Council achieved Silver level award; the Whangarei District Council Bronze; Hutt City Council Progress award and Franklin District Council stepped up and “started the journey”. Only three private sector companies even took part in the Business Excellence Awards process last year.
And now, more than 30 local authorities are taking part in the Performance Excellence Study Awards sponsored by the Ministry for the Environment and the Department of Internal Affairs. The programme effectively introduces them to the principles of best practice management and encourages some of them to go the whole hog and embrace the more rigorous Business Excellence Awards programme.
Even the management language has changed. Whangarei District Council chief executive Mark Simpson talks about becoming “a world-class organisation” while Hutt City Council’s CEO Rik Hart says his team wants to “be the best” in the local body business.
New Zealand’s local authorities are benchmarking themselves, not just against each other, but against the best in the world, when they can find organisations to benchmark against. And that’s not easy, according to ARC chief executive Jo Brosnahan. “Believe it or not but New Zealand is now internationally leading edge in local body management,” she says confidently.
Local government is big, and important, business. British magazine The Economist suggested in global survey of local government that local bodies are more influential and critical to nation’s development and well being than central government. And New Zealand’s current Labour Government is constantly transferring the delivery and implementation of its central government policies to local government, which in itself is causing additional performance pressures – but that’s another story.
There are 74 territorial authorities in New Zealand – 15 city councils and 59 district councils – and 12 regional councils. They contribute 3.5 percent of the country’s gross domestic product on annual operating revenues of $3 billion, capital expenditure of $800 million and $32.5 billion of term assets. They employ 40,000 individuals and elect 1152 individuals onto their governing bodies.
So what is driving the change? It began, according to Brosnahan, around 15 years ago with the 1989 local body legislative reforms and has been reinforced and embedded by subsequent amendments to the Local Government Act. Specifically, it began with the redefinition of the chief executive’s role – by which he and she became more accountable for personal and organisational performance.
According to Brosnahan the introduction of model that clearly separated out local authority governance and management roles changed the rules of the game and fired the revolution. “Spelling out clearer responsibilities for the CEO created an environment in which they were challenged to produce results and provide good leadership. It gave well-defined leadership role for CEOs as compared with the political dimension of local authority governance,” she explains. “The result is better managed and better led [local government] organisations.”
The Local Government Act 2002 spells out the terms and conditions for appointing chief executive. They are performance related, regularly reviewed and time specific. They demand, for instance, that among other things they:
• Imbue the employees of the local authority with spirit of service to the community;
• Promote efficiency;
• Maintain appropriate standards of integrity and conduct;
• Ensure the local authority is good employer.
They must also subject themselves to rigorous and regular personal performance reviews.
The Act also spells out the dynamics and expectations of the relationship between management and governance. There is little doubt about what is expected of whom.
Brosnahan’s sense and understanding of the political imperatives that started the revolution doesn’t seem to matter much to today’s local body leaders. The reality for them is now. “Rather than calling it management revolution, I would just say it is the result of shared vision by the senior management team and district councillors,” says Whangarei’s Simpson. His Council’s goal to become world class is “driven by commitment to provide better service for money to our ratepayers”.

External scrutiny
Whangarei uses the Business Excellence process as benchmark and external auditor. “We want to be able to prove we are achieving [performance] in measurable way that stands up to external scrutiny.”
Hutt City’s Hart sees the drive to perform in similar terms, delivering better deal to ratepayers. That, in turn, is in part underpinned by drive to attract more ratepayers to the city. “We are competing with other centres to attract businesses in particular,” he explains. “We must be set up to attract them and we need to be competitive and that generally means we must keep rates (relatively) low. I don’t think the legislation is what is driving us.”
Waitakere City mayor Bob Harvey agrees the revolution has been in progress for 10 years or more. It is, he says, part of trend toward “future thinking”. Councils aren’t just about “roads, rates and rubbish any more and so we don’t need so many bureaucrats and straight out contract managers”. Harvey’s spin on the transition focuses on “cities building communities”. That means local authorities need staff and management to have “a broader focus”.
“The issues of social cohesion and environmental stewardship are as important nowadays as mowing the grass. That’s been brought about by legislative change. For example, there is now legal requirement to consult fully and meaningfully with communities, particularly Maori,” he adds.
Brosnahan thinks the public “expects” local government to perform better. “We are owned by the community. They are also our customers so you become very driven to achieve community outcomes. That has been entrenched in local government legislation,” she says.
Local authorities are now charged with producing annual plans, even 10-year plans, reporting progress against these plans and defining specific outcomes that must be achieved. For managers to prove their progress and their achievements they must adopt more effective processes and approaches. For CEOs like Brosnahan the Business Excellence Awards go long way to helping them audit their own performance and simultaneously show the community at large that they are running their organisations well. That is challenge for any self-respecting or competent manager or CEO.
“We take part in the Awards process for two reasons,” says Hart. “It is the only means available to prove to our community that we are managing the business in way that can be compared with the best in public sector and other organisations. We can prove the point that we are well managed and can therefore reduce the comments that we are inefficient.
“And running and managing an organisation to be the best is far more enjoyable and gets everyone involved. It motivates people. And people leave us with more skills, ensuring that their personal balance sheet is in great shape,” he explains.

Changed attitudes
The impact of t

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