520 words (6 minutes reading time) by Tim Whistler

Recently, I have been thinking about the dichotomy between effectiveness and efficiency. It is becoming a focal point in assessing how councils perceive and measure their performance.

Peter Drucker’s insights, encapsulated in “The Effective Executive,” draw a clear distinction between effectiveness and efficiency. Effectiveness, he says, is about selecting the right goals and attaining them, with the emphasis on doing the right things. On the other hand, efficiency revolves around optimising available resources to achieve those goals, with the emphasis on doing things right.

Effectiveness is doing the right things. Efficiency is doing things right.

Peter Drucker

The current fiscal challenges, as highlighted by Colin’s recent OECD-focused post, shed light on a prevalent issue of CEOs defining efficiency as cost-cutting. It raises a critical question: Are these really efficiency measures, or are they merely financial savings made by reducing services?

True efficiency would involve delivering the same service with fewer resources (and, potentially, at lower cost). The conundrum lies in the difficulty of reducing costs while maintaining service standards— a more difficult task that requires creativity and an innovative approach.

Lancing Farrell touched upon the dynamics of ‘clients, customers, consumers, and citizens.’ It underscores the powerlessness of individuals receiving public services to exercise choice regarding service providers—a privilege reserved for customers in the private sector. In local government, cutting services might boost financial performance, but it can create hardship when service recipients lack the ability to influence or change their service provider.

The core issue with the prevailing mindset in OECD decision-making is its lack of imagination and vision. A myopic approach risks oversimplifying responses to challenges like the rate cap, limiting solutions to a reduction in services rather than exploring alternative delivery methods that align with recipient needs at a lower cost.

Unlike the private sector, where innovation is a daily driver, local government seems hesitant to adopt a transformative mindset. My proposition is straightforward: councils must ensure that they are doing the right things before endeavoring to do them better— i.e. prioritise effectiveness before chasing efficiency.

The real peril lies in the possibility of investing efforts and resources into refining the wrong processes. There’s a genuine risk that, in the quest for efficiency, councils might end up doing the wrong things righter. Instead, the focus should shift towards doing better things by embracing transformative change in response to the rate cap.

It’s time for councils to move beyond mere tinkering and usher in a new era of forward-thinking approaches that genuinely enhance services, ensuring they not only weather financial constraints but emerge stronger and more impactful.

My call is for a paradigm shift—a departure from the ordinary to embrace the extraordinary in local government management.