Tag Archives: Weatherby

51 – An ABEF OSA. What is it and do you need one?

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Posted by Colin Weatherby                                                               900 words

puzzled

The Australian Business Excellence Framework (ABEF) provides a systematic way to think about your organisation and its improvement. It identifies seven categories of organisational activity that are systematically analysed when you conduct an organisational self assessment (OSA) to determine the approach, deployment, results and improvement. This examination of approach, deployment, results and improvement is called the ADRI cycle and it is similar to PDCA and other improvement cycles except that it focuses on outcomes not actions. So, that is what it is.

Do you need one? (And, more importantly, what will you get if you have one).

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46 – Labor’s rate cap to hurt services and infrastructure, ratings agency warns’. The Age, 27 February 2015.

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Posted by Colin Weatherby                                                         900 words

 slices of cake
Image from http://www.that-is-good-crap.com

This article follows an earlier piece in The Age,  ‘Plan to cap council rates at inflation could lead to service cuts and job losses in Victoria’ on 23 February 2015. Both articles are about the planned legislation in Victoria to restrict councils to rate increases at or below the Consumer Price Index from 2016 unless they seek an exemption from the Essential Service Commission. Some councils have already started to cut jobs to reduce expenditure ahead of rate capping. Others are forecasting cuts to their services and reduced maintenance or renewal of community infrastructure.

This is occurring at the same time that the State government is shifting more costs onto councils and national grants to councils are being frozen. I have previously posted on rate capping (see here , here and here). As you can imagine, rate capping is dominating talk within local government circles. Continue reading →

44 – The Executive. What exactly is its role?

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Posted by Colin Weatherby                                                                                         700 words

This seems to be a common question. You frequently hear people saying, ‘that decision will need to go to the Executive’, or ‘don’t do that until you have been to Exec’. If asked, the people saying this often can’t say why they have offered this advice and reviewing the terms of reference for the Executive will usually reveal that it is not a decision making body. It is individual members who have the authority to make decisions. So, what is its role? Continue reading →

43 – Developing a dashboard for performance measurement. A case study.

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Posted by Colin Weatherby                                                                         1000 words

mini dashboard

I was recently asked to create a dashboard for my unit with the intention that it function like the dashboard on my car (no this is not my car). This is to be done in the absence of an organisational dashboard or scorecard or performance reporting system. There have been a few posts on this topic by Lancing Farrell (here and here) and this post discusses the application of some of the theory.

I started by listing all of the current measures that are in place from external and internal sources of accountability. This included legislation, sector-wide improvement programs, customer satisfaction surveys, occupational health and safety accreditation audits, internal audit programs, culture surveys, organisational policies, and financial reporting. Some of these measures are applied continuously, some are annual and others occur periodically. All of them have some organisational or public reporting of performance. This list was very much a list of things that other people think it is important to measure about the performance of the department. For whatever reason.

Then I made a list of all of the things that I think it is important to measure to know work is being done properly. Continue reading →

40 – Unskilled, unaware, or both? The Dunning–Kruger effect at work.

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Posted by Colin Weatherby                                                                                         800 words

One of my favourite sayings is that ‘anything is possible when you don’t know what you are talking about’. I have often wondered why I feel the need to use it so often at work. After a colleague sent me link on the Dunning-Kruger effect I am starting to understand why.

The Dunning–Kruger effect is named after David Dunning and Justin Kruger of Cornell University. They published ‘Unskilled and Unaware of It: How difficulties in Recognising One’s Own Incompetence Lead to Inflated Self-Assessments’ in 1999. The title gives you a good idea about the contents. The focus of the paper is;

We argue that when people are incompetent in the strategies they adopt to achieve success and satisfaction, they suffer a dual burden: Not only do they reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the ability to realise it.

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37 – Risk delegation. Who has it at your council?

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Posted by Colin Weatherby                                                                                         480 words

Have you ever wondered who has the formal delegation to accept risk on behalf of the organisation? I know that you probably spend most of your time dealing with systems that seek to reduce or eliminate risk, but what happens when risks must be taken? How do you assess and accept those risks?

My bet is that there is no system to accept risk and that your organisation has little understanding of the risks that are being taken by managers each day. I think that the absence of a system to formally assess and accept risks is the reason there are endless systems to get rid of it. I am not talking about the Risk Register and the big strategic or operational risks that are obvious to everyone. I am talking about the daily risks that arise when something hasn’t worked out the way you would like it to but work must go on. Continue reading →

34 – Middle managers in local government: the ‘scrapers of burnt toast’?

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Posted by Colin Weatherby                                                        620 words

burnt toast

This is the phrase used by Peter R. Scholtes in The Leaders Handbook to describe the work of many middle managers as ‘expediters or troubleshooters’ in organisations that have yet to eliminate waste and create ‘efficient, smooth, uncluttered flows of work’.   He says that in a ‘flat’ organisation the layers of middle management have been removed as part of the focus on eliminating waste. In an efficient system, they are unnecessary and non-value adding roles. I am sure he doesn’t think that middle managers aren’t required.  You just need less.  It is an interesting idea.

Scholtes says that removing layers as part of improving organisational performance reduces opportunities for promotion. As a result, people leave to find less efficient organisations where their skills in ‘expediting and troubleshooting’ are required to deal with inefficiencies and waste to make the system work. I started thinking about my role and the role of colleagues in middle management, and what we spend each day doing. What do we talk about when we meet in the corridors? Are we mostly adding value or just spending our time making dysfunctional systems work? Continue reading →

30 – ‘The better things are, the worse they feel’. How so?

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Posted by Colin Weatherby                                                                         700 words

This is the title of a chapter in Richard Farson’s rather interesting book Management of the Absurd – Paradoxes in Leadership. Farson is a psychologist, author, and educator. He co-founded the Western Behavioral Sciences Institute in 1958. His article on the ‘Failure-tolerant Leader’ is included in the HBR’s 10 Must-Reads on Leadership. He is a guy worth reading.

The idea that things feel worse when they are actually getting better appealed to me because of something a colleague said to me at work recently. Continue reading →

20 – Plan, promise or accountability tool. What role does your Council Plan play?

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I am always interested in documents called ‘plan’. Add ‘strategic’ and you really have my attention. I suppose it all depends on definition of a plan. Here are a few of my thoughts to add to the posts on planning by Lancing Farrell (posts 11 and 12).

I take a plan to mean a document containing your intended actions to achieve an outcome. If circumstances change, the plan will need to change accordingly. It is a mechanism for a group of people to come to a common understanding of what they are going to do and it helps communicate that to others. It guides decision making and the allocation of resources. It is a reference when you need to confirm the direction you want to go in. You probably have your own definition.

In local government, however, plans tend to take on other roles. They become public promises about actions to be taken and the objectives that will be achieved. It is the yardstick to measure the performance of the Council and the organisation and hold them accountable – have they kept their promises? Politicians keeping their promises has become a bit of an obsession in Australia. The Council Plan is the main document that fulfils that purpose in Victorian local government.

Actions from the Council Plan ‘cascade’ into department work plans and the performance plans of individuals, who are then measured on how well they achieve them. Accountability for delivering the plan – implementing the actions and producing the outputs – is then embedded. But what if circumstances change?   What if the plan you started with is no longer a good one? It does happen. As Keynes is reported to have said, “When the facts change, I change my mind. What do you do, sir?” Unfortunately, in local government, changing your mind about your plan is often seen as breaking promises or avoiding accountability.

This is a simplistic view of the world. Sometimes the plan needs to change in order for the same outcomes to be achieved. When the outcomes start to change all the time without a process to ensure it is what the community wants, it probably is an accountability problem. I have observed councils sticking to plans and implementing actions that everyone knows are no longer relevant, but they continue to be implemented because ‘we said that we would’. Often this happens because lead time to get an action into the plan has made it obsolete or another more relevant opportunity for action has emerged.

The emergence of a new and better way to achieve the same outcome can be the most difficult to deal with. The Council Plan is not readily amended and the amendment process is public, which opens the door to accusations of breaking promises. It is difficult for a council to take risks in producing value for the community if those risks are to be embodied in the Council Plan. There is usually a process to double check on the ‘doability’ of any actions proposed for the Council Plan – unless we are sure we can do it, it often doesn’t get included. Imagine a business only planning to do the things that it already knows it can do.

The risk is that the plan becomes a controlling document full of risk-free and relatively easily achieved actions.

Is there a solution? The flexibility of a plan to effectively guide action in achieving outcomes must be balanced against the public demand for accountability from their elected representatives and the council. The planning structure and the process to develop and review plans is probably the key. At the moment a lot rides on the Council Plan. In the absence of lesser organisational plans that capture actions and accountabilities of the organisation, they are being incorporated into the City Plan, which is essentially the plan made by the councillors for their term in office. As such, it necessarily has a political focus.

A better planning process, which is possible within the legislated planning framework, would seem to be the answer.

Colin Weatherby

16 – ‘Council rates capped from mid-2016’, The Age, 21 January 2015

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‘Council rates will be capped next year with the state government forcing councils to justify any increases above the rate of inflation. Councils must now send their budgets to the Essential Services Commission for permission to raise rates above inflation. Inflation – as measured through the consumer price index [CPI] – is currently running at 2.3 per cent. Last financial year rates increased by an average of 4.23 per cent.’

Some people will be thinking it is about time that municipal rate rises are curbed. Nobody likes paying more taxes. But is it a smart move?

Rate capping has been in place in NSW for more than 30 years. In 2013 the NSW Treasury Corporation reported that a quarter of the state’s 152 councils had a ”weak” or ”very weak” financial sustainability rating. If not corrected, half would be ”very weak” financially within three years. In 2014 the number of councils requesting rate increases above the 2.3% cap set by the Independent Pricing and Regulatory Tribunal almost doubled. The requested increases ranged from 5.5% to 11%. The increases reflect the financial realities confronting local government and ‘catch up’ increases to cover lack of revenue

NSW councils have responded to the rate capping in different ways. Ryde Council has created an RSA-type animation that neatly explains to residents the choices that need to be made.  It illustrates the implications of the demands for growth in services and infrastructure when revenue is declining.  New works are less possible and maintenance and cleaning standards have to be reduced with long term impacts on infrastructure.  Ryde is having to define ‘core’ services, i.e. what is essential versus what is nice to have, and balance reducing service levels with increasing rates.  It is a simple and effectively told story (https://www.youtube.com/watch?v=iR_BJKAo0dA).

The overall effect of rate capping seems to have been a reduced ability to provide services to the community, accumulated backlogs in infrastructure renewal or replacement, and increased reliance user charges for revenue. According to Brian Dollery and Albert Wijeweera the increase in rates in NSW since 1995 has been about half the increase that has occurred in Victoria and council rates per capita are lower that every other state and only higher that the Northern Territory.

Councils in Victoria experienced enforced rate cuts and capping for a period of time in the 1990’s. The Kennett Liberal/National coalition government capped rates in 1995 and imposed a cap of one percentage point below inflation. The cap was lifted in 1997 to allow increases of up to 3 per cent – with Ministerial approval. In 1999 the Bracks Labor government scrapped the cap altogether. The councils unable to draw on financial reserves or liquidate assets were profoundly affected and the impacts, similar to those now evident in NSW, were enduring.

The arguments in favour of rate capping are worth some discussion. They revolve around preventing councils from abusing monopoly powers in delivery of services; stopping expenditure on services or infrastructure that the State government regards as ‘non-core’; reducing the risks of poor governance; and limiting the ability of councils to provide services that are better provided by the private sector. Essentially, it reflects a lack of trust by the State government – councils won’t make sensible decisions without supervision.

In practical terms, what is it likely to mean for Victorian councils from day to day?

For a start, some councils are talking about entering into shared services to reduce costs. This has been a popular idea with CEO’s for a while that has failed to take effect. But will shared services really help? The evidence suggests that the savings are seldom as great as people think and there are initial costs involved in making those savings. John Seddon writes eloquently on the shortcomings of shared services. More in a future post.

What else can councils do? Reducing expenditure on capital works to enable funds to be used for recurrent operational expenditure is one likely response. In the short term this is fine if there are not pressing asset renewal demands or community demands for new assets. Cutting back expenditure on new assets will be easier for developed municipalities. It will not be as easy for developing municipalities where population growth is creating demand for new assets to meet community needs. In all municipalities, reduced expenditure on asset renewal will ultimately result in reduced fitness for purpose and increased future costs.

What about cutting recurrent operational expenditure? This is much more difficult because the community is likely to immediately lose services. There will be opposition from those who no longer receive the benefits of a service that is cut. The typical council operational budget is about 60-70% salaries and wages, 10-30% contractors and materials, and 5-10% plant and equipment. There will need to be a reduction in staff numbers for the cuts to be meaningful. This is likely to result in industrial disputes. If staff numbers are not reduced, there will need to be big cuts to expenditure on contractors and materials and/or plant and equipment, which impacts directly on the ability of staff to be productive.

Reducing expenditure on contractors is probably the easiest cut to make, especially if it doesn’t directly impact on delivery of services to the community. For many councils, this type of cut will impact on major maintenance/minor renewal of assets, which often sits outside the capital budget because the amount is below the threshold for capitalisation or the works do not increase asset life and cannot be capitalised. In the 1990’s it was cuts to this type that had long-term impacts when assets failed and needed premature renewal because of inadequate maintenance.

Rate capping has been shown to reduce the ability for councils to respond to community demand for services and to adequately care for physical infrastructure. It takes away the potential for local communities to determine the amount of funding they want to provide for council activities. It might drive administrative efficiencies, but at what cost? More than anything, it says that the State government knows more about meeting local needs. In every respect, it is just wrong.

Colin Weatherby

Dollery, Brian and Wijeweera, Albert 2010. An assessment of rate-pegging in New South Wales local government, in Commonwealth Journal of Local Governance, Issue 6: July (http://epress.lib.uts.edu.au/journals/index.php/cjlg/article/view/1619)

Seddon, John 2014. The Whitehall Effect.

The Age. http://www.theage.com.au/victoria/council-rates-capped-from-mid2016-20150120-12tz7k.html