198 – Essay No. 5 – Local government and leadership.

Posted by Colin Weatherby                                                                         1300 words

Mark H Moore strategic triangle

Mark H. Moore’s ‘strategic triangle’ – the basis for value-led public sector management

I have been thinking about leadership a lot recently. It has been a recurring theme in posts on this site. Reading Jeffrey Pfeffer’s book has challenged my thinking about how leaders work and what motivates them. It has reinforced some of my scepticism about leaders and why they do what they do. I tend to agree with Peter Drucker’s questioning of the distinction between leadership and management. Ultimately, organisations, particularly in the public sector, have to be managed. The idea that somehow managers aren’t leaders or that leaders aren’t managing doesn’t make sense.

Having said that, I can think of organisational leaders I have known who couldn’t manage. At some point they just ticked the leadership box and assumed the position! Pfeffer explains how and why everyone then goes along with it. Once you are a leader it seems you can get to stay there without any real scrutiny and accountability for your performance. That has definitely been my experience in local government.

I keep imagining myself working in an organisation with an effective leader who manages the organisation for high performance (not career advancement). One that provides clear strategy, direction and goals.  One who coordinates effort to  across the organisation to achieve those goals. In particular, I have been thinking about how they could do that in local government. Continue reading

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189 – Essay No. 2 – Local government, effectiveness and efficiency.

Posted by Lancing Farrell                                                                              3300 words

false economy cartoon

Image

People in local government regularly discuss effectiveness and efficiency. Often this happens in relation to pressure on revenues, such as rate capping. Most of the discussion centres on efficiency rather than effectiveness, and opportunities to stop delivering those services that are seen as ‘cost shifting’ from other government. The efficiency discussion is often not well informed. Frequently it focuses on inputs while ignoring outcomes and public value. Any savings are usually equated with cost cutting, not creating the same value at lower cost.

Australian researcher and writer Christopher Stone has published several papers on ‘false economies’. Each addresses a different aspect of productivity and efficiency in the public sector.

“Everyone has the right to know that money is not being wasted; that it is being spent as efficiently as is possible.” Christopher Stone, Decoding Efficiency, April 2013.

So, what is efficiency and how does it differ from effectiveness? Continue reading

179 – Some thoughts on local government and public value.

Posted by Parkinson                                                                       1400 words

common good

A number of posts written have been written about public value by others (see Why do we provide the services that we do in local government?, Customer, client, citizen, resident or ratepayer. Who are we dealing with?, Applying the public value scorecard in local government services. Part 1. , Applying the public value scorecard in local government services. Part 2., Public value gap analysis. A tool., Public value gap analysis. Some actions., Making high performance happen through value-led management., and Value-led management in local government. Some further thoughts). This post is an attempt to provide a context for further thinking about public value in local government.

Common good and public value

The political philosopher Michael Sandel has identified that rising social inequality is leading to a separation in ways of life between the rich and the poor. He believes that when this happens there is no longer a common way of life because “they don’t use the same public institutions, don’t inhabit the same civic spaces, and don’t avail themselves of the same public services”. As a result, Sandel believes that we can cease to think that we are ‘in it together’ enough to even deliberate together as members of a political community to determine common good.

The gap between the rich and poor is growing in Australia. According to the Oxfam report ‘Still the Lucky Country?’, the wealthiest Australian are disproportionately influential and the poor are at risk of being marginalised and unheard. Extreme wealth provides the power to influence government policies that favour those with wealth, regardless of what would work best for the whole of society.

The common good is the ‘large’ form of public value. Continue reading

26 – The first 25 posts. What have you missed?

Posted by Lancing Farrell                                                                                              1100 words

Writers have posted 25 times since the start of the year. A number of themes and ideas have been discussed. This post provides a brief overview.

The goals are set out in post 1 – track current issues and discuss the issues that are ‘everlasting, widespread and insoluble’ (using the least amount of words). A range of issues have since been covered from the daily media, day to day work life, and the things people often talk about but seldom resolve.

Post 2 and 5 discuss local government services – what we do and how we can define it. 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.

In post 3 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.

The impact of training on performance is discussed in post 4 in response to media criticism of the Australian government public service for its spending on training. The post suggests that understanding, documenting and improving processes would yield more benefit than providing more training for most councils.

In post 6 the differences between customers, clients, citizens, residents and ratepayers are discussed. Understanding which role someone has chosen to take in an interaction is important in determining the value they expect. This can be useful in differentiating between public and private value expectations.

Post 7 looks at public service job cutting and the link to productivity. Some key messages from the Centre for Policy Development report False Economies: Unpacking public sector efficiencies are discussed. The post identifies the importance of defining public value so that any changes to resource levels can be made in the knowledge of the impact they will have on the value produced.

Post 8 presents an imaginary script for an episode of Gordon Ramsay’s ‘Kitchen Nightmare’ in which he assesses the performance of local government as if it were a restaurant.   Hopefully it is both entertaining and thought provoking. What would Gordon Ramsay say?

In post 9 some emerging characteristics of people and councils are discussed. Obligatory empiricism, oblivious narcissism, and consensual lying are put forward as reasons why councils always seem to learn everything from scratch, leaders set out to meet their own needs first, and why people tell others what they want to hear for the sake of convenience.

Post 10 draws a ‘line in the sand’ with a discussion of the changes that have impacted in Victorian local government since the 1990’s. Part history lesson and part explanation of the present, the post concludes that the most influential change has been to the tenure of the CEO and their increased dependence on the goodwill of their council for survival .

Planning in local government gets a thorough airing in posts 11, 12, 18, 19, and 20. In posts 11 and 12 the current organisational planning processes is critiqued. Posts 18 and 19 suggest ways to better integrate planning. Post 20 discusses the role of the Council Plan.  All posts provide commentary on how to develop plans that are realistic, achievable and focused on delivering the value expected by the community. Constraints identified include the need to work within legislated requirements and the need for leadership to really understand ‘the business’ to be able to implement a ‘top down’ and ‘bottom up’ planning process.

In post 13 the role of policies and strategies is discussed. Are they becoming convenient but ineffective solutions to difficult problems, devices to avoid doing something that needs to be done, or just a way to be seen to be doing something?

Post 14 is an attempt to explain why councils stick with conventional organisational structures and avoid dealing with cross-functional processes; why systems seek to control risk and increase compliance without regard for producing public value; and why council culture encourages people to avoid making decisions. The discussion centres on what an organisational culture survey, an ABEF organisational self-assessment, and the Executive’s risk appetite can reveal.

Four books that should be read by every leader in local government are discussed in posts 15 and 17. The books are Recognising Public Value by Mark H. Moore, The Whitehall Effect by John Seddon, Improving Performance – How to Manage the White Space on the Organisation Chart by Geary A. Rummler and Alan P. Brache, and The Leaders Handbook by Peter R. Scholtes. Each book has a different focus and there is a mixture of public sector and business reading.

Post 16 discusses the rate capping 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. This post covers the potential for shared services and the potential impact on capital and operating budget cuts.

In post 21 the way councillors feel about their role is discussed. Do they feel inundated and manipulated or respected and influential? The difficulties they face as volunteers and in becoming skilled in their role, working together in an adversarial system, and coping with very demanding workloads, are covered. The message is stop complaining and support them more effectively.

What does a high performance local government organisation (HPLOGO) look like? In post 22 a methodology is proposed to define and create a HPLOGO. Based on the work of Andre de Waal, a set of characteristics of a HPLOGO are described (as actions) and prioritised.

Post 23 is a bit tongue in cheek. It is an attempt to pick up on the ‘chip on the shoulder’ prevalent in some parts of local government. Is local government a plaintive country tune or a majestic aria?

In post 24 an article by Frank Ostroff from Harvard Business Review (Change Management in Government) is discussed in relation to making high performance happen. He describes four unique barriers to change in the public service related to leader skills, leader tenure, rules that create inflexibility, and stakeholder resistance to reform.

Finally, post 25 looks at local government budgeting and how it is focussed on the past and has difficulty coping with improvement and innovation.   The need to balance investment in compliance with improving customer service and developing new services is discussed with reference to Christopher Stone’s work on public sector efficiency.

25 – Budgeting in local government. Is it capex, opex or a new initiative?

It is budget time again. In conjunction with ‘planning time’ (see posts 11 and 12) councils are starting to compile their proposed budgets for 2015/16. Capital bids are being evaluated to determine ‘logistically’ whether they can be completed within the financial year and ‘strategically’ whether or not they should proceed. Recurrent budgets are being submitted by managers, either built from a zero base or simply last year’s budget with the Consumer Price Index (CPI) increase. Councils will be comparing the amounts requested with the estimates in the long term financial plan to see whether they match. So where is the problem?

What if you have had growth in demands for services? Service levels may have to be increased in response to community needs. More services may be needed to cater for population growth. What if you have had significant increase in the number of assets to be maintained and renewed? More parks, more roads, more buildings. Somewhere in between the funding available for capital and recurrent budgets sits the ‘new initiative’ (NI) funding that is set aside for budget or staff increases in the recurrent budget. Councils know that costs can increase by more than CPI. They just don’t cope with it very well.

For starters, the amount available for NI’s is usually inadequate and is over bid by the organisation.  It is not unusual for $1 million to be available and for bids to add up to $3 million or more. When this happens there are often no predetermined criteria for prioritising amongst the bids. The orderliness of the budget process then comes under pressure. When criteria are developed, they struggle to effectively assign priorities. How do you decide whether expenditure to mitigate risks or increase compliance is more important than making efficiency or performance improvements to existing services? What about investment in developing new and better services now and for the future?

As you can imagine, local government will tend to eliminate risk. So the first category of NI’s are usually funded. Councils also like to satisfy the community, so improvements to services the community says are important but performing below expectations, will also be funded if at all possible. The last priority to be funded, unless there is a political imperative, is new and better services. This correlates with one of Christopher Stone’s findings in his report False Economies – unpacking public sector efficiency, that ‘two significant barriers to public sector innovation are an overly risk averse orientation within organisations, and a lack of resources invested in developing and implementing innovative ideas’. The whole process is hardly a sure-fire way to ensure that the available financial resources are allocated in the way that best meets community needs now or in the future.

Part of the solution lies in a better planning process that actively considers the relative benefits from investment in risk reduction, service improvement or new services. In a business balancing these considerations is essential. Owners and managers must ensure that there is sufficient investment in compliance, and satisfying customer needs, and developing new services for the future. Why not local government?

Posted by Whistler

Stone, Christopher, 2014. ‘False Economies – unpacking public sector efficiency’.

7 – ‘Why this obsession with cutting public service jobs?’ The Age, 2 January 2015

I have often wondered this myself. It seems to be part of our culture to get stuck into public servants every now and then. The author says that cutting public service budgets it is politically attractive because ‘everyone hates public service workers and cutting their budgets seems to help balance the budget by removing public sector waste’.

However, in doing so, they are achieving a false economy according to the report cited from the Centre for Policy Development (CPD), False Economies: Unpacking public sector efficiency.

‘Every Australian needs to understand what politicians are talking about when they speak of the ‘efficiency’ of government. Why should we care? Because this is our money, being spent on us and the things that matter to us.’

This report completes a body of work on productivity and efficiency completed by the CPD Public Service Research Director, Chris Stone. Some of his key messages are;

  • A sound understanding of efficiency is needed in public debates on what services to fund, and whether their delivery should be outsourced or not, in order to ensure we are getting public value for public money.
  • There are significant difficulties involved in comparing the Australian public sector performance with the private sector, but the evidence available indicates that the two sectors have a similar level of efficiency.
  • Although Australia’s public sector is comparatively efficient, there is scope for improvement.
  • The government is identifying the public services that will be affected by cuts, but does not appear to be guided by any underlying rationale of what services government should be providing.
  • The heavy focus on cuts without sufficient consideration of the value of services means that other strategies for increasing efficiency are neglected, in particular innovation and professional accountability.
  • Two significant barriers to public sector innovation are an overly risk averse orientation within organisations, and a lack of resources invested in developing and implementing innovative ideas.
  • The current method for managing performance does not provide clear guidance to public servants on how they can work toward their organisation’s goals.

It is a report of more than 70 pages and should be read by every public service manager. The discussion in Chapter 1 about different types of efficiency is enlightening.

The connection between value, public value in particular, and reducing resources to achieve greater ‘efficiency’ is important. When there is a lack of clarity about what is meant to be achieved it is difficult to measure performance and easy to cut resources with a clear conscience. The consequences are only immediately evident to an informed few and may become evident to everyone in the long term. Defining the public value to be created is an essential activity. Then the arguments about efficiency can be held in the knowledge of what impact on value will result from changes to resources.

Colin Weatherby

Stone, Christopher 2014. False Economies: Unpacking public sector efficiency (http://cpd.org.au/wp-content/uploads/2014/06/CPD-OP37_False-economies_-compiled_EMBARGO26June.pdf)