224 – Risk taking in local government

By Colin Weatherby                                                                                               900 words

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Lancing Farrell raised several important issues in providing advice to a colleague regarding risk management. How does a council balance the pressure not to take risks and fail, with the competing pressure (often from the same sources) to take risks and meet demands to create new value?  

Risk is an interesting concept and there are various definitions. I like to think of it simply as the uncertainties related to achieving your goals. It is about the hazards along the pathway as you make your way towards your destination.

Businesses that don’t take risks will fail. They become uncompetitive or customer satisfaction drops. Either way, they lose business to competitors taking risks to create value that customers want and will pay for. We can all think of the companies that have taken big risks in redefining a service or product to create a new market.

You are probably wondering what this might have to do with local government. Aren’t we just doing what we have always done?

Many councils are. Whether they should be, or whether they will be able to continue to do so, should be questioned. We now live in the ‘age of the customer’ – residents want personalisation, mobility, self-service, rapid response, and efficiency (efficiency for them, not the council). The variability introduced by customers must be quickly and effectively absorbed by the organisation. Complexity, by its very nature, creates risks.

In conjunction with mandated limits on prices (the rate cap) and growing numbers of customers (as Lancing points out, Melbourne is growing rapidly), the rising expectations of residents means that councils must do things differently. Different usually involves risk taking.

I recently attended a training session on developing an organisational risk appetite. It showed me how councils could identify hazards and manage risks differently, yet still satisfy the pressure to stop things going wrong while meeting the demand to create new value. It needs a re-think and a more sophisticated approach to risk and compliance. Continue reading

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223 – Risk management in local government

By Lancing Farrell                                                                                                  730 words

risk taking

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Is there a delegation for taking risks at your council? Does your council have a risk appetite? Are the strategic risks that have been identified appropriate? Are the operational risks relevant? Does the audit program decrease or increase risk?

These are questions that a colleague raised with me recently when trying to understand the way risks were managed at their council. I suggested they look at their risk management framework – how is risk assessed in terms of likelihood and consequence. This should explain the inherent risk, current risk rating, the target risk and rate the effectiveness of controls. It can make interesting reading.

Next, I suggested they look for their organisations lists of key risks – strategic and operational. These are usually in the risk register. This isn’t always easy to find. Someone in the risk department will have it. Most councils will have up to 8-12 strategic risks. There will be many more operational risks.

Councils are very risk aware. Some people describe it as risk aversion. I think this is driven by the multiple accountabilities that councils live with – the Minister for Local Government, the Ombudsman, the courts, the media and the community. Sometimes it is hard to know who is going to take issue with what you have done. Continue reading

215 – From the Archive: Creative ways to make your capital expenditure target. Some ideas.

Posted by Whistler                                                                          570 words

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Originally posted 20 April 2015

Yes, it is that time of the year when our engineers and accountants become highly creative.   By June 30 they will need to explain whether or not the targeted amount of capital works has been completed. Often the target is expressed as simply as ‘90% capital program completed’. Usually it is a KPI for the CEO and senior managers. That makes it an important target.

So, why the need for such high levels of creativity?

Delivering 90% of the planned capital works is harder than it sounds. Many councils would have averaged around 60% to 70% over the last ten years. This is partially explained by growth in capital expenditure that has exceeded the organisational capacity to deliver. Another part of the explanation is that capital works programs have become more diverse with more people participating in the planning and delivery across the council. As a result, projects have become more complex and people with inadequate project management skills are often involved.   Finally, councillors have become much more involved and the capital works program will now have projects that councillors, sometimes in response to community submissions to the budget process, have included – often at the last minute.

As the capital works program has grown, become more complex, involved more people with less skills, and started to include projects without adequate pre-planning or feasibility analysis, especially if they require community engagement, it has become much more difficult to deliver the whole program. But the target remains.

This is where the creativity occurs. Continue reading

214 – Worried about pretend managing? More importantly, are you dealing with real or imagined work?

Posted by Whistler                                                                                                          300 words

imagined work

Colin Weatherby has made some interesting points in writing about pretend managing. A colleague recently reminded me of another important idea – there are two kinds of work in any workplace: the imagined and the real.

He was discussing his work in injury prevention in the workplace. In his interactions with injured workers and their managers he has observed that there are two types of work. The imagined work exists in the minds of the managers making decisions about what and how workers will do their work.

When discussing worker’s injuries with managers, the managers frequently describe their understanding of the work and how it happens. This is imaginary work because usually they have not done the work. Some have not even studied the work. They are in charge of the work being performed and believe they know what is going on.

In comparison, the real work is what injured workers describe. It is how they actually do the work. It includes the short cuts and workarounds that are not in any Safe Work Method Statements. It is what they know from doing the work every day.

It is important for managers to know that there are two types of work and that there is a difference.

If managers operate as though their understanding of work is accurate and complete they will make mistakes. And, according to my colleague, workers will continue to be injured. Recognising that there is real work, and that it is important to understand exactly how it operates, is essential. Organisations need ways for the two types of work to come together. The Service Action Plans described in an earlier post is one way for this to happen.

There is no doubt that pretend managers are a problem. But a pretend manager dealing with imagined work is potentially a much bigger one.

182 – Public management, or management in public?

Posted by Whistler                                                          220 words

scaredy cat

I was reminded today of a practice that seems to have crept into local government with the increasing insecurity and risk aversion of top management. It is similar to the concept of ‘risk farming’.

The practice involves your manager avoiding responsibility by setting up meetings for anything that is happening that they sense could have a down side. In the past, a discussion with your manager at your one-on-one meetings would have sufficed. You could let them know what is happening and undertake to keep them informed.

Now, they are likely to ask you to set up a series of meetings involving them and anyone else they can think of who may have an interest in the matter. The purpose is to ‘keep an eye’ on the issue and ‘support’ you in seeing it through. At the meetings you become publicly accountable for your management of the matter.

In the event that the matter blows up, your manager will implicate everyone else involved and they will be witnesses to your failure. Your manager will no longer be held accountable for your performance – after all, there was a whole group of people ‘supporting’ you.

I am old enough to remember when a manager would provide support by encouraging and advising, and by standing by your side when things were getting tough. They don’t seem to be able to get out of the way fast enough now.

As someone said to me recently, when people don’t know something they get sacred and when they get scared their aversion to risk goes up.

171 – A series: Managers as designers in local government. Part 3.

Posted by Lancing Farrell                                                                              500 words

design and thinking

This is the third post in a series of four. It addresses some of the challenges to design-thinking.  Jon Kolko has identified several.

His first challenge is accepting that you will be dealing with more ambiguity.

“It is difficult if not impossible to understand how much value will be delivered through a better experience or to calculate the return on investment in creativity.”

He says that ambiguity doesn’t fit well with organisations that value ‘repeatable, predictable operational efficiency’. This will be an issue for councils seeking to use design-thinking. For councils, there is an expectation that value will be created through efficient use of resources without any waste. The strong risk aversion of local government reinforces elimination of uncertainty, or at least pretending it has been eliminated. Embracing a culture or experimentation, customer value creation and risk taking will be very challenging. Continue reading

145 – The deep web and local government recruitment.

Posted by Colin Weatherby                                                                                         1100 words

deep web

Local government executive recruitment is a game. Often recruitment is not genuinely based on competence and ability. In many cases, relationships are far more important. I have heard it described as the ‘deep web’ – what you see isn’t all there is. So, how does it work?

Councils recruiting a new CEO tend to go for ‘tried and true’ or ‘shiny and new’.  I think analysis will show an alternating pattern from one to another. It is almost as though councilors become bored with their CEO, or, more likely, the CEO refuses to do what they tell them to do. Once a CEO stands up and says ‘no’, they are likely to be on the way out.

Councilors know that they can demand that a CEO does what they want – whether or not it is in their or the community’s best interests. I think that once a council has dismissed a CEO and they have a ‘taste of blood’ they are more likely to do it again and a cycle of CEO non-reappointments and appointments begins (with all the disruption this brings).

When councils are recruiting a CEO, they rely on assistance from the recruiters – companies that specialise in helping councils to recruit executives. These companies can be highly influential. Continue reading