108 – Melbourne City Council: Organisational Capability Review, May 2015.

Posted by Colin Weatherby                                                                         1300 words

Melbourne capability review model

The public release of this critical report has been something of a surprise. Commissioned in March 2015 and released in May, the report prepared by Jude Munro, Dr Bronte Adams and Steve Parker has looked at three key capabilities; leadership, strategy and delivery. Each has been rated on a four point scale for several elements. Out of the ten attributes rated, six were seen as a ’development area’ and one as a ‘serious concern’. The remaining three were seen as ‘well placed’ and none were seen as ‘strong’ (p.14). So what does this mean?

melbourne assessment criteria ratingsThe report states that this is the first time that this review model has been applied to local government in Australia. Its intention is to provide a forward looking, whole of organisation review that assesses an organisation’s ability to meet future objectives and challenges.


“This review provides the opportunity and impetus to take a very good organisation and make it even better.” Ben Rimmer, CEO

The objective of the capability review process is to strengthen organisational capability to anticipate and respond to known and emergent challenges and opportunities.

melbourne assessment of capabilityThe key findings for leadership (p.6) are that collaboration and working cross-functionally are not systematically supported; Directors are not seen to operate as a cohesive team or as a team leading the whole organisation; Directors are seen to focus on operational issues to the detriment of leading strategic approaches; there is no reliable corporate approach to talent management or succession planning; and HR has not functioned strategically or to enable change.

For many of us working in local government there isn’t anything new in these findings. Melbourne’s leadership is not unique. I would challenge  what appears to be a key assumption – that the composition and stability of the leadership group at Melbourne is the key causal factor. The review observes that leaders have been there for a long time and they are described as ‘senior in age, male dominated and lacking ethnic diversity’. I think that whilst this would be different to any councils in Victoria, the leadership issues are commonplace.

In councils where there are more women in the leadership group, the Executive membership regularly changes , and there is greater ethnic and age diversity, cross-functional collaboration is poor ; each Director leads their directorate before they lead the organization; Directors get too involved in operational matters ; and there s no talent recognition, development or retention. HR is likely to be more strategic and supporting change because there are less resources and more change – and HR is always a key player because changes are always to people.

In relation to strategy, the key findings (p.7) are that absence of a set of organisational strategies to support Council Plan can ‘incentivise the narrow delivery of a specific priority’; there is no clarity around the organisation’s role in relation to city-wide issues; external stakeholders encounter silos; and strategy evaluation doesn’t occur consistently and isn’t focused on outcomes.

No surprises here either. Most Victorian councils lack a corporate business plan (for want of a better name) that sets out how the organization will acquire and use resources to deliver on the Council Plan. This is not the case in other parts of Australia. The inability to focus on city-wide issues is related to not systematically working cross-functionally. The inability to do this is significant limitation on local government. Silos seem to be inevitable in local government, and failing to evaluate strategy is a symptom of the continuous headlong rush into new projects. Each year sees a new batch of political or organizational projects being hatched.

The key findings for delivery (p.8) are that this is seen as a strength by stakeholders and some significant examples of innovative delivery are cited. However, this is seen to happen despite business processes not always function effectively; not always existing; or, more commonly, multiple business processes existing.

“A surprising number of fundamental business processes are at an early stage of development or do not exists, for instance a business operating model; corporate plan; asset management strategy; procurement strategy; IT strategy and support; and talent management.”

Further, the organisation measures and reports against indicators but performance ‘intelligence is not fully leveraged’. Executive decisions are not routinely communicated to the wider organisation and compliance can be discretionary.  A lack of organisational discipline undermines productivity by requiring initiatives to be negotiated and agreed by full consensus.

These findings I found more interesting. The absence of an operating model is an unusual finding. It is not a common concept to apply to local government. It should be, but it isn’t. As a result, many council waste energy and resources fumbling between operating models without ever articulating what the model is or what needs to be done to make it successful. Analysis of most councils will identify an unwritten operating model evident through the decisions of the organisation. It will also find a lot of conflicting behavior.

Anyone associated with Melbourne knows that it is a well resourced organisation that should be able to deliver on any organisational goal. Compared to other councils, it has significant resources available. I think that multiple business processes and lack of organisational discipline are two sides of the same coin and are exacerbated by the high levels of resources. Most councils cannot afford to support multiple systems or processes. It doesn’t mean that they don’t have multiple processes for some activities, but they are far more likely to have one procurement system, one asset management system and one IT system – and a common strategy for each.

The future opportunities identified (p.9) are sensible and would apply to most councils in Victoria.

  1. Re-focus the leadership group on leading the whole organisation, making decisions and seeing them through to implementation, making them at the appropriate level, and engaging with stakeholders.
  2. Set the future organisational and city direction with a 10 year organisational vision and a 4 year corporate plan.
  3. Revamp and develop the organisations underpinning business systems and process disciplines.

I like the recommendation to re-focus the Executive on ‘big picture issues, corporate strategies, organisational vision and a corporate plan’ (p.41). Someone has to run the organisation. When the Executive spends most of its time managing upwards and outwards, middle managers are left to try and manage the organisation. This is too difficult when there are silos inhibiting cross-functional work flows and decision making authority remains with the Executive.

I also like the recommendation that the Executive should communicate their unity and be visible to the rest of the organization (p.41). When the Executive becomes caught up in the importance of their role at the ‘pinnacle’ of the organisation and the excitement and drama of the councilors daily interactions, they forget how important it is to the people delivering services to have leadership that is present. Any CEO or Director who says that they don’t have time to get around and talk to people and be seen needs to read a leadership book.

Leadership starts at the top and the behaviours of leaders are powerful guides to behavior throughout the organization.

I have two questions:

  1. If Melbourne can initiate a review of this type, complete it in such a short period of time, and make it publicly available immediately for debate and consideration by everyone before taking action, why can’t all councils do it?
  2. What is it that we are frightened for everyone to know?

Read the report and ask yourself.

Melbourne City Council, 2015. Organisational Capability Review May 2015.