Posted by Lancing Farrell 2000 words
This is the first in a series of essays to wrap up the 200 opinions, essays and observations planned for Local Government Utopia. As such, it attempts to bring together some of the themes that have emerged in the various posts.
Have you ever imagined yourself to be in the office of the CEO?
You have arrived at work to be told that The Ombudsman’s office wants to talk to you about the outcome of an investigation triggered by a Whistleblower. You have a meeting at the Auditor General’s office that morning to discuss the latest report they have released on Council Customer Service. A copy of the Independent Broad-based Anti Corruption Committee (IBAC) report on Council Depot Management is in your in tray along with a complicated Freedom of Information request.
That evening you have a Risk and Audit Committee meeting where you need to explain the lack of action in implementing recommendations from the 10 internal audits completed in the previous year. A councillor has left you a phone message saying they are unhappy with a decision regarding services delivered to an elderly resident. There is an email from the local newspaper wanting comment on an expose they are running on councillor entitlements.
I am sure this is not a usual day. But it also isn’t an entirely unrealistic scenario either. There are lots of sources of accountability for local government. Often, they act on the organisation independently and there is no effort (and sometimes no opportunity) to coordinate the organisational response. As a result, sources of accountability frequently operate at cross purposes and can be counter-productive.
With some assistance from Mark H. Moore I will discuss the main sources of accountability operating on local government in Victoria:
Auditing accountability – There are government agencies responsible for ensuring that local government uses its funding and powers appropriately. The existence of these agencies and the threat of audits creates a powerful and continuous accountability focussed on money, particularly expenditures, and compliance with policies and procedures.
They typically do not focus on satisfaction of clients or achievement of social outcomes. They can also limit innovation and organisational learning by creating a type of accountability that keeps organisations focussed on existing policies and procedures, for better or worse.
For example, Councils have Risk and Audit Committees with external members that oversee an internal audit program and the management of strategic risks. There are also annual financial audits that are overseen by the Victorian Auditor General’s office (VAGO). In addition, VAGO regularly reviews local government practice and releases reports that become references or benchmarks for council practice.
Political accountability – Elected representatives seek to ensure that the organisation responds to their expectations and demands. They have been elected to implement a program (i.e. their electoral platform). There is no guarantee that they will agree with each other and provide a clear, consistent and durable statement of the public value to be produced.
Governments are often divided and elected representatives lack the time, energy, skill or incentives to provide thoughtful oversight. The lack of cohesion within councils is key limiting factor. Councillors are volunteers. They receive what is effectively a stipend for their many hours of work in representing their constituents. They may have no political experience or skills when elected. They often don’t know the other councillors elected with them and have no relationship with them. If they do, it could be because they have competed with them at previous elections.
Often, councillors are elected who have diametrically opposed platforms – they believe their mandate is to achieve the opposite outcome to another councillor. Unfortunately, the form of accountability that could be the strongest form of democratic accountability is often weak, less committed to performance, and unable to effectively influence the organisation.
In Victorian, the Council Plan is legislated to be the ‘plan of action’ for the councillors during their term in office. As such, it is inevitably a political document, which is often tempered by the organisation in an attempt to make it more balanced and reflect the broad range of council responsibilities. But it is seldom holistic and there will usually be major services and activities on which the councillors do not believe they were not elected to act, or in which they have no interst.
Councillors, acting as the ‘council’ in the chambers, can provide strategic direction to the organisation and management of operations is the legislated responsibility of the CEO as the only employee appointed by the council. At some councils a lot of effort is put into determining whether or not a matter is ‘strategic’ and within the purview of the council, or ‘operational’ and the responsibility of the CEO. It is a messy and conflicted boundary that creates tensions and risks councillors either ‘meddling’ in day to day organisational issues or feeling disempowered and manipulated.
If a council fails to meet the standards of behaviour or performance required by the Victorian government, an observer can be appointed to watch the council, or the State can suspend or dismiss the council and appoint an administrator. This is never a good look for the CEO and usually every effort is made to accommodate or moderate councillor behaviour.
Councillors can become confused regarding their role in particular matters – are they representing a constituent, are they making a decision as a member of the board of directors for the council organisation, or are they a regulator? It has been humorously (I think) proposed that councillors wear different hats when they act in their different capacities so that everyone, including themselves, knows what they are doing.
Pluralist demand for accountability – This encompasses the uncoordinated demands of anyone with an interest in some aspect of organisational performance and a platform to make that concern heard. This could be everyone in a democratic society and citizens and interest groups can be powerful and demanding agents of accountability.
They do not have to wait for special authorisation of elections. They can move on their own and whenever they want to and force public managers and elected representatives to pay attention. The media can broadcast and amplify their demands. They play a critical role in focusing the attention of elected officials on the issues they cover.
This type of accountability is problematic and often commands most of the attention of public managers. Whilst this is consistent with government accountability to the people, it is inconsistent with the goal of producing an exacting, consistent, broad demand for improvement on a limited number of dimensions of performance. All too often it focuses on individual incidents instead of aggregate performance, on process over outcomes, and on only one dimension of value creation rather than the full spectrum of values at stake in government operations. It is an unpredictable form of accountability.
The growth of social media and on-line publishing by local newspapers, with reader comments, has amplified this form of accountability for all organisations, and especially public organisations. Reporting on council decisions or issues is immediate. Public comment is continuous and capable of quickly making small issues into big issues. Often campaigns on social media are personal and libellous, especially in comparison to the weekly local newspaper that once provided the only opportunity for reporting and commentary through letters to the editor.
Complaint systems and legal recourse – the institutions that hear and respond to citizen complaints about the conduct of government. In Victoria these abound – IBAC, VAGO, the Ombudsman, the Victorian Civil and Administrative Tribunal (VCAT), the Office of Local Government (State government department), and of course, the civil courts.
In the face of these powerful, unrelenting and uncoordinated accountabilities, it is not surprising that CEO’s and top management become fearful and insecure. Their limited tenure (typically 3 to 5 year contracts), limited employment opportunities (there are only 79 council CEO roles in Victoria and less than 40 in metropolitan centres) and appointment and performance review by ‘amateur’ politicians (most councillors have no experience in appointing a CEO or in CEO succession), combine to make them risk averse. There is a lot at stake.
This has several affects on the organisation. The first is heightened emphasis on the fealty of direct reports to the CEO. Rather than making these appointments to best meet community or organisational needs, they are typically made to meet the need of the CEO to feel supported by loyal and indebted people. People they can trust.
The second is a predisposition for organisational processes to avoid risk. The most important of these is the role the Executive takes in decision making. In a risk averse environment, more and more decisions are referred to the Executive. The symptoms of this are more and longer Executive meetings, more people saying ‘that will need to go to Exec’, and delays in getting onto the agenda for the Executive or regularly being ‘bumped’ to a future meeting.
The third is when Executive decisions start to be deferred. You know that you are at the next stage of petrification when the risk appetite is low, hard decisions are avoided, decision making is slow, productivity is low, and organisational improvement is non-existent. When I have worked at councils like this, the effect is palpable when you first join the organisation but people who have worked there for a long time have become conditioned to it.
The result is immobility and a petrified organisation. The organisation becomes like a sailing dinghy – if forward movement is not occurring, especially when the wind is , especially when conditions are difficult. The argument that no decision is as good a decision as any other in the face of uncertainty doesn’t hold in these circumstances.
Creating forward movement is difficult when the Executive are fearful, risk averse, and actively supporting each other and the CEO, rather than looking at what the organisation and/or the community needs and where the councillors are coming from. Often there is conflict with councillors at this point. They will sense that the organisational leadership is not doing what needs to be done – even if they don’t know themselves what needs to be done.
If the CEO becomes reactionary to the various sources of accountability, including the councillors, the lack of coherence and direction becomes very apparent. It is not unusual for the community, through their councillors, to be asking for more responsiveness in service delivery and greater efficiency to reduce rates. At the same time, the Risk and Audit Committee will be requesting a rigorous internal audit program to satisfy their requirement to oversee risk and probity.
Internal audit programs frequently have difficulty in addressing compliance with systems or processes because the systems and processes have not been documented. Sometimes they are not clear to anyone, including those in charge of managing them. When this happens, the internal audits come up with recommendations for broad management actions rather than specific compliance requirements. The organisation starts to be driven by audit actions to tighten key processes, such as procurement, fraud, corruption, delegation and authorisation.
Unfortunately, the friend of fraud prevention – disintegration – is the enemy of more responsive and efficient service delivery. Passing work though as many hands as possible, with as many checks and balances as possible, reduces the opportunity for fraud. It also spreads the risk into many hands and reduces the accountability for any individual involved in the process.
The silos it creates can defeat responsive and efficient service delivery by providing more opportunities for service failure at the interfaces between functions. Ironically, when silos are created and processes fail, decision making becomes difficult and problems escalate to the Executive to clog their meetings. The Executive then becomes less effective. If the decisions are difficult and risky, the cycle begins again.
I would like to think that there are local government CEO’s prepared to take the risks necessary to effectively lead their organisation. CEO’s who understand the various ways that they and their organisation will be held accountable and who have a strategy to deal with them in a coordinated way.
A way that doesn’t let one source of accountability dominate to the detriment of the others.
Moore, Mark H., 20134. ‘Recognising Public Value’.