R to Z

Rate capping

Rate capping is being 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. What is the potential for shared services and the potential impact on capital and operating budget cuts?

Is there a relationship between rate capping and shared services, and what is the potential for them to be seen as a panacea?  Scale economies, front and back office separation, and a case study from NSW are covered. Focussing on demonstrating value should be part of the response to rate capping, in addition to creating efficiencies and simple cost cutting.

What are the ‘core’ services in local government?  The premise is that rate capping will prompt councils to start identifying core and non-core services so that core services are more protected from budget cuts. Services provided by the council as an authority are described separately from those that are coercive or discretionary and some key criteria are identified.

Whistler puts forward some ‘workarounds’ in response to rate capping that we can expect to see.

The Essential Service Commission (ESC) draft report on rate capping outlines the revenues to be capped and how the capping, and any exemptions, will operate.

The impact of application of the CPI and WPI and the Efficiency Factor is likely to be more significant than anticipated by the ESC for many councils, particularly large urban councils. The main reason I say this is that the average of 40 % of expenditure on labour costs doesn’t reflect the reality of many councils. For many it is 55 to 60%. This means that a significant part of their labour costs will be adjusted for CPI, not the higher WPI.

Recruitment

In a minor expose, Colin Weatherby discusses his experience, and the experience of other managers, in seeking more senior roles. The recruitment ‘game’, role of recruiters and the innate conservatism of CEO’s is discussed. What has your experience been?

Tim Whistler proposes an alternative recruitment approach in response to Colin Weatherby’s experiences. Based on the success of Suor Cristina in Italy in the television reality show ‘The Voice’, he suggests blind auditioning. Why not?

The value of people with a non-conventional resume is discussed by Colin Weatherby with reference to an article by Claudio Fernández-Aráoz. The current recruitment game played by so many councils is likely to have long term impacts on innovation and capability to adapt to change.

Risk management

Risk farming’ is defined as the practice of top management spreading risk around the organisation in the name of good governance to avoid personal accountability. (Post 27). You must have seen it happen.

In comparison, risk delegation is described in relation to who it is in your organisation that has the delegation for various levels of risk. (Post 37) The chances are that no one has a delegation and that risks are avoided rather than taken to provide customer value.

Services

Local government services are discussed in terms of what we do and how we can define them.  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.

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.

What are the ‘core’ services provided by local government? Is it only the services that councils are compelled to deliver by legislation, or does it include universal and those directed towards specific groups within the community?

Service operations improvement using a ‘service action plan’ is discussed by Colin Weatherby based on a case study through his work. The process of developing the plan in collaboration with team members is discussed. The link to service redesign using the basic reengineering principles of ‘separate, relate and integrate’ is discussed in a follow up piece. Both posts provide advice on how to initiate sustainable and continuous service improvement processes.

Service catalogues are a hot topic in local government, especially with rate capping imminent. Everyone seems to think that once they have a catalogue it will enable discussions with the community about what they want to stop, continue or start. We’ll see. Colin Weatherby draws on a case study to describe a simple and effective participatory process to create a service catalogue.  It uses existing budget structure matched to the ‘customer view’ of services.

Strategy

A series of posts about the article ‘Why Strategy Execution Unravels – and What to Do About it’ written by Donald Sull, Rebecca Homkes and Charles Sull in which they discuss how organisations can implement strategy more effectively by addressing five myths are discussed.

The first myth is that strategy implementation relies on organisational alignment and effective ‘line of sight’ from corporate mission to each individual and their work.  The second myth is that effective strategy implementation requires sticking to your plan, not matter what happens.  The third myth covered is that communication is effective in achieving the understanding necessary to implement strategy.

The fourth myth is that an organisation with a strong performance culture will naturally be effective in strategy implementation.  The fifth and final myth is that strategy implementation should be driven from the top by senior management.

Tim Whistler provides a word on failure to implement strategy in local government based on his experiences.

Superheroes

Captain Council, the local government superhero provides a different viewpoint in discussing the behaviour of Councils, councillors and the organisation.

Suppliers

The differences in operations between councils and their suppliers are discussed. Why do major suppliers invest in integrated management systems when councils don’t? It is a good question.

Thinking.

Tim Whistler describes four types of thinking seen in local government, some more often than others. Many would see the first two as related and a progression in thinking, from simple convenience to the potential consequences, and would be comfortable to stop there – you can pat yourself on the back because you have started thinking ahead.

The two latter types of thinking – integrative and systems – move people from focussing only on their personal needs and towards thinking about the good of the organisation.

Value.

Lancing Farrell discusses Mark H. Moore’s Public Value Scorecard.  She looks at how it can be used in local government using waste services as an exemplar. Each element of the scorecard is explained along with some of the practical issues in its use. It is easier than you think.

Colin Weatherby discusses a tool he has developed to focus discussion on different types of value. It helps to separate private value expectations from public value considerations for the purpose of analysis and discussion. Once the relationships are understood and have been debated, the tool facilitates discussion about how different value is related and facilitates planning for how it can be integrated in services. It is the ‘multi-tool’ for value planning.

What do local government and milk have in common? Milk producers have been redefining the value of their product and differentiating between different suppliers of different milk products to add value to a commoditised product. Why can’t local government do the same and avoid being a supplier of low cost commoditised services?

In a series of posts discussing the question ‘what if a council was a car?, the relative merits of the Hyundai Excel, Leyland P76 , Volvo 240 , Alfa Romeo 1750 or Tesla Model S  get a run. The value proposition for each is outlined with respect to a council. Where would you like to live or work?

Value creation

What is the relationship between business strategy, the business model and operations strategy in local government? How are these concepts relevant to the creation of value? Strategy in local government is usually not documented and only becomes evident by studying the behaviour of the organisation over time. Likewise, the business model to deliver on strategy is also seldom articulated.

While strategy is critical to determine the business model, there is a need for operations capable of implementing strategy. To do this, an operations strategy is required. It can be developed top-down, bottom-up, in response to market requirements or from an operations resources perspective. Operations capability is central to Mark H. Moore’s strategic triangle in creating public value.

A new theory of value creation in local government links strategy to services to markets to business model to operations strategy to value proposition. It is not really a new way of thinking, just a new way of understanding what we already do so that it can be improved.

Value-led management

How can organisations fundamentally re-think what they are doing rather than continue to optimise what they are currently doing?  Viewing a service as a value chain enables the demand and supply chains to be separated and joined by a ‘value proposition’ to focus operations design on creating specific value required by customers.

Likewise, how can you redesign council operations to deliver better value?  The ideas of Mark H. Moore, and David Walters and Mark Rainbird are linked to provide an integrated approach to understanding value.

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