Monthly Archives: February 2015

31 – Measures, targets, KPI’s, KRA’s and CSF’s. What are we talking about?

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Posted by Lancing Farrell                                                                              740 words

There is a lot of talk in the public sector about measurement. Some people say that you ‘can’t manage what you can’t measure’ or, ‘what gets measured, gets done’. There is no doubt that measurement is inextricably linked to the pursuit of better performance and greater accountability. In local government, we seem to be desperately looking for things we can measure that will tell us how well we are doing. But are we measuring the things that count? Continue reading →

30 – ‘The better things are, the worse they feel’. How so?

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Posted by Colin Weatherby                                                                         700 words

This is the title of a chapter in Richard Farson’s rather interesting book Management of the Absurd – Paradoxes in Leadership. Farson is a psychologist, author, and educator. He co-founded the Western Behavioral Sciences Institute in 1958. His article on the ‘Failure-tolerant Leader’ is included in the HBR’s 10 Must-Reads on Leadership. He is a guy worth reading.

The idea that things feel worse when they are actually getting better appealed to me because of something a colleague said to me at work recently. Continue reading →

29 – Local government shared services. Is it the silver bullet for rate capping? – Part 2

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Posted by Colin Weatherby                                                                         950 words

In the previous post, I discussed economies of scale and the cost savings possible through shared services. This post continues the discussion, starting with the implications of front and back office separation.

The history of ‘back office’ and ‘front office’ separation is worth some discussion. According to Seddon, it began with an article by Richard Chase in the Harvard Business Review in 1978. In the article, Chase recommends separating the ‘high customer contact’ and ‘low customer contact’ elements of the service system because of the different operations involved. Low customer contact operations are more efficient and, as a result, have lower costs and it makes sense to isolate them from the disruptive effects of customer interactions if it can be done without sacrificing service effectiveness. However, service effectiveness is exactly what Seddon believes has been lost in many of the cases he cites. Continue reading →

28 – Local government shared services. Is it the silver bullet for rate capping? – Part 1

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Posted by Colin Weatherby                                                                                         620 words

The Victorian state government plan to cap municipal rates has revived discussion about shared services. Some leaders see shared services as a silver bullet to reduce costs. What potential do shared services have to help councils respond to rate capping?

The article Government shared service back in vogue notes that shared services are usually justified by business cases promising operational efficiencies and cost savings. However, the article cites numerous examples of shared services that have failed to deliver.

In 2011, the West Australian government disbanded its Office of Shared Services centre after an Economic Regulation Authority review found the project was over budget and unlikely to deliver promised savings of $57 million a year. Instead the project had cost $401 million and achieved minimal savings.

The Queensland Health payroll upgrade was developed under the auspices of a shared services group. Originally with a budget of $98 million, and due for completion in July 2008, the project was the subject of a royal commission last year and is expected to cost taxpayers $1.2 billion by 2020.

In The Whitehall Effect John Seddon documents examples of similar failures in the United Kingdom. The track record of failure suggests that there are significant risks associated with shared services. So why are they regularly on the public sector reform agenda? Continue reading →

27 – Risk farming or good governance? How some executives avoid accountability.

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Posted by Whistler                                                                                          400 words

What do I mean by ‘risk farming’? It is the practice of spreading risk around so that your responsibilities become so diffused amongst various individuals and groups that you can’t be held accountable for them. There will always be someone else sharing accountability. So, how is it done?

You start by taking every matter before the Executive. Continue reading →

26 – The first 25 posts. What have you missed?

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Posted by Lancing Farrell                                                                                              1100 words

Writers have posted 25 times since the start of the year. A number of themes and ideas have been discussed. This post provides a brief overview.

The goals are set out in post 1 – track current issues and discuss the issues that are ‘everlasting, widespread and insoluble’ (using the least amount of words). A range of issues have since been covered from the daily media, day to day work life, and the things people often talk about but seldom resolve.

Post 2 and 5 discuss local government services – what we do and how we can define it. The conclusion is that local government needs to provide services that fit within legislated requirements, are responsive to broader community needs and expectations, and meet the individual purpose for each person receiving a service. Each service can be defined as a cross-functional process or value chain.

In post 3 the complexity evident in local government is discussed, including the involvement of customers in service delivery, the variability they introduce, the difficulty measuring service quality or setting service goals and measures, and the impossibility of separating service delivery from politics.

The impact of training on performance is discussed in post 4 in response to media criticism of the Australian government public service for its spending on training. The post suggests that understanding, documenting and improving processes would yield more benefit than providing more training for most councils.

In post 6 the differences between customers, clients, citizens, residents and ratepayers are discussed. Understanding which role someone has chosen to take in an interaction is important in determining the value they expect. This can be useful in differentiating between public and private value expectations.

Post 7 looks at public service job cutting and the link to productivity. Some key messages from the Centre for Policy Development report False Economies: Unpacking public sector efficiencies are discussed. The post identifies the importance of defining public value so that any changes to resource levels can be made in the knowledge of the impact they will have on the value produced.

Post 8 presents an imaginary script for an episode of Gordon Ramsay’s ‘Kitchen Nightmare’ in which he assesses the performance of local government as if it were a restaurant.   Hopefully it is both entertaining and thought provoking. What would Gordon Ramsay say?

In post 9 some emerging characteristics of people and councils are discussed. Obligatory empiricism, oblivious narcissism, and consensual lying are put forward as reasons why councils always seem to learn everything from scratch, leaders set out to meet their own needs first, and why people tell others what they want to hear for the sake of convenience.

Post 10 draws a ‘line in the sand’ with a discussion of the changes that have impacted in Victorian local government since the 1990’s. Part history lesson and part explanation of the present, the post concludes that the most influential change has been to the tenure of the CEO and their increased dependence on the goodwill of their council for survival .

Planning in local government gets a thorough airing in posts 11, 12, 18, 19, and 20. In posts 11 and 12 the current organisational planning processes is critiqued. Posts 18 and 19 suggest ways to better integrate planning. Post 20 discusses the role of the Council Plan.  All posts provide commentary on how to develop plans that are realistic, achievable and focused on delivering the value expected by the community. Constraints identified include the need to work within legislated requirements and the need for leadership to really understand ‘the business’ to be able to implement a ‘top down’ and ‘bottom up’ planning process.

In post 13 the role of policies and strategies is discussed. Are they becoming convenient but ineffective solutions to difficult problems, devices to avoid doing something that needs to be done, or just a way to be seen to be doing something?

Post 14 is an attempt to explain why councils stick with conventional organisational structures and avoid dealing with cross-functional processes; why systems seek to control risk and increase compliance without regard for producing public value; and why council culture encourages people to avoid making decisions. The discussion centres on what an organisational culture survey, an ABEF organisational self-assessment, and the Executive’s risk appetite can reveal.

Four books that should be read by every leader in local government are discussed in posts 15 and 17. The books are Recognising Public Value by Mark H. Moore, The Whitehall Effect by John Seddon, Improving Performance – How to Manage the White Space on the Organisation Chart by Geary A. Rummler and Alan P. Brache, and The Leaders Handbook by Peter R. Scholtes. Each book has a different focus and there is a mixture of public sector and business reading.

Post 16 discusses the rate capping proposed for local government in Victoria. The history of rate capping in Victoria and the long-term effects of it that are apparent in NSW provide a backdrop to a discussion about what councils can do in response. This post covers the potential for shared services and the potential impact on capital and operating budget cuts.

In post 21 the way councillors feel about their role is discussed. Do they feel inundated and manipulated or respected and influential? The difficulties they face as volunteers and in becoming skilled in their role, working together in an adversarial system, and coping with very demanding workloads, are covered. The message is stop complaining and support them more effectively.

What does a high performance local government organisation (HPLOGO) look like? In post 22 a methodology is proposed to define and create a HPLOGO. Based on the work of Andre de Waal, a set of characteristics of a HPLOGO are described (as actions) and prioritised.

Post 23 is a bit tongue in cheek. It is an attempt to pick up on the ‘chip on the shoulder’ prevalent in some parts of local government. Is local government a plaintive country tune or a majestic aria?

In post 24 an article by Frank Ostroff from Harvard Business Review (Change Management in Government) is discussed in relation to making high performance happen. He describes four unique barriers to change in the public service related to leader skills, leader tenure, rules that create inflexibility, and stakeholder resistance to reform.

Finally, post 25 looks at local government budgeting and how it is focussed on the past and has difficulty coping with improvement and innovation.   The need to balance investment in compliance with improving customer service and developing new services is discussed with reference to Christopher Stone’s work on public sector efficiency.

25 – Budgeting in local government. Is it capex, opex or a new initiative?

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It is budget time again. In conjunction with ‘planning time’ (see posts 11 and 12) councils are starting to compile their proposed budgets for 2015/16. Capital bids are being evaluated to determine ‘logistically’ whether they can be completed within the financial year and ‘strategically’ whether or not they should proceed. Recurrent budgets are being submitted by managers, either built from a zero base or simply last year’s budget with the Consumer Price Index (CPI) increase. Councils will be comparing the amounts requested with the estimates in the long term financial plan to see whether they match. So where is the problem?

What if you have had growth in demands for services? Service levels may have to be increased in response to community needs. More services may be needed to cater for population growth. What if you have had significant increase in the number of assets to be maintained and renewed? More parks, more roads, more buildings. Somewhere in between the funding available for capital and recurrent budgets sits the ‘new initiative’ (NI) funding that is set aside for budget or staff increases in the recurrent budget. Councils know that costs can increase by more than CPI. They just don’t cope with it very well.

For starters, the amount available for NI’s is usually inadequate and is over bid by the organisation.  It is not unusual for $1 million to be available and for bids to add up to $3 million or more. When this happens there are often no predetermined criteria for prioritising amongst the bids. The orderliness of the budget process then comes under pressure. When criteria are developed, they struggle to effectively assign priorities. How do you decide whether expenditure to mitigate risks or increase compliance is more important than making efficiency or performance improvements to existing services? What about investment in developing new and better services now and for the future?

As you can imagine, local government will tend to eliminate risk. So the first category of NI’s are usually funded. Councils also like to satisfy the community, so improvements to services the community says are important but performing below expectations, will also be funded if at all possible. The last priority to be funded, unless there is a political imperative, is new and better services. This correlates with one of Christopher Stone’s findings in his report False Economies – unpacking public sector efficiency, that ‘two significant barriers to public sector innovation are an overly risk averse orientation within organisations, and a lack of resources invested in developing and implementing innovative ideas’. The whole process is hardly a sure-fire way to ensure that the available financial resources are allocated in the way that best meets community needs now or in the future.

Part of the solution lies in a better planning process that actively considers the relative benefits from investment in risk reduction, service improvement or new services. In a business balancing these considerations is essential. Owners and managers must ensure that there is sufficient investment in compliance, and satisfying customer needs, and developing new services for the future. Why not local government?

Posted by Whistler

Stone, Christopher, 2014. ‘False Economies – unpacking public sector efficiency’.

24 – High performance in local government. Part 2 – How can you make it happen?

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In Part 1 I talked about what a high performing local government organisation could look like. In this post I look at how you can improve performance to become high performing. Change management is a buzz phrase in local government at the moment. Everyone in leadership seems to accept that there is a need for change but they can’t agree on how to do it.

Frank Ostroff has some good advice for change agents in the public sector. He says that sustained performance improvement isn’t hampered by failure to identify solutions; indeed, he suggests they are often straightforward. In Part 1 made a list of 24 actions that you could start with to create a high performance local government organisation. Why not just implement them? Part of the answer lies in what Ostroff describes as the four unique obstacles to change in public services.

  1. Leaders are not appointed on the basis of their commitment or experience in reform. Instead, they are appointed for their ‘command of policy, technical expertise or political connections’.
  2. Leaders are appointed for relatively short periods and have limited time to see reforms through to conclusion. Therefore, they tend to focus on quick policy reforms.
  3. Rules covering activities such as procurement, personnel, and budgeting put in place to prevent wrong-doing have made government inflexible. The penalties for failure are also greater than the rewards for exceptional performance.
  4. Everyone has a rightful stake in government activities. Almost any reform is likely to meet with resistance.

I know he is talking about government in the US, and there are some significant differences in Victorian local government. But there are also strong similarities. His four obstacles are just as prevalent, even if it is for some different reasons.

Ostroff provides some insights into the characteristics of successful public service reforms. He describes five principles and illustrates them in some detail with cases. His first principle is to ‘improve performance against mission’. This resonates with the work of Mark Moore about the creation of public value. As with Moore, he says that the mission should be the focus. Improvement in performance achieving the mission (i.e. creating the required public value) needs to be the fundamental objective of the reform program. This makes a lot of sense in local government, where the ‘why’ often becomes unclear or generic.

His second principle is to ‘win over stakeholders’. This is important within and outside your organisation to create a broad support base for reform. His third principle is to ‘create a roadmap for reform’. He suggests three phases; identify performance objectives; set priorities; and roll out the program. It is essential to formulate a vision and set a clear path for reform.

The fourth principle is to take a comprehensive approach. He relates reform to organisational redesign involving integration and alignment of leadership, structure, processes, infrastructure, people and performance management. This concurs with Rummler and Brache and their thinking about the ‘infrastructure’ required for sustained performance improvement, as opposed to episodic campaigns. This involves seeing the organisation vertically and horizontally. They talk about the various levels of an organisation (vertical) and the performance needs (horizontal). I have reproduced their ‘nine performance variables’ diagram below.

the 9 performance variables

The performance needs must be met by the organisational leadership to ensure that work flows smoothly across boundaries. I think that taking a comprehensive approach is particularly good advice for local government, which seems to naturally form silos based on disciplines or functions. Failure to integrate or align is often the reason that reform is necessary.

The last principle is about the importance of being a leader, not a bureaucrat. Ostroff believes that public service managers are inherently respectful of barriers and may hesitate to remove them. There needs to be a readiness to demolish barriers to reform. He says that they are also likely to have to establish trust and demonstrate their sincerity. The failure of successive reforms often leads to cynicism, which needs to be overcome.

Ostroff cautions of the need to be aware of present realities, respect the complexity of what you are trying to do, and to hold people accountable for both results and their commitment to the reform effort. These are key points for local government reform. Present realities include organisational culture and its resistance to change. The complexity inherent in local government activities presents special challenges during a period of reform. Finally, the lack of effort to measure performance and use results to improve seems to be a hallmark of local government. In a reform process there must be accountability if it is to endure once the reform has been implemented.

In a nutshell, formulate your vision, take your present situation into account, seek the support of your stakeholders, set a clear path, be mindful of the complexity in what you are doing, and hold people accountable. Good luck.

Lancing Farrell

Ostroff, Frank   2006. Change Management in Government, in Harvard Business Review, May.

Rummler, Geary A., and Brache, Alan P. 1995. Improving Performance – How to Manage the White Space on the Organisation Chart.