Posted by Whistler 400 words
What do I mean by ‘risk farming’? It is the practice of spreading risk around so that your responsibilities become so diffused amongst various individuals and groups that you can’t be held accountable for them. There will always be someone else sharing accountability. So, how is it done?
You start by taking every matter before the Executive. Continue reading
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’.
I have heard people say that if local government was a song it would be a country song. I guess they mean it would be a tale of woe, the classic country song about losing your land, your partner, your friends and then your dog. It is tragic and suggests that local government is a victim of its circumstances.
It is an interesting observation. At a recent ‘future of the local government’ conference, discussion was dominated by the limited ability for councils to increase rates, cost-shifting from higher levels of government, and ever increasing community demands. It is a grim tale. Despite these realities, I think it is too easy to blame our circumstances, limit our expectations and play the victim.
I would prefer to work in a different musical genre altogether. Take opera for instance. Despite story lines that are similarly tragic, there is a worldliness, grandeur and determination in the lives of the characters. They have a sense of hope for the future. Opera has a majesty that suits my career ambitions.
If there is a link to a country song, as someone with a passing interest in country music (yes, both types), I figure that Melinda Schneider captures the essence of local government with her lyric ‘we’re going in the same direction in a million different ways’ (Big World, Small World). I think these words describe the work of many people in local government, trying hard and having to make it up as they go along in the absence of an organisational ability to determine a set of priorities and coordinate action to achieve them. It is not a tragedy. But it needs to change.
Posted by Whistler
In local government, we like to survey our culture and develop plans to move from the current culture to the preferred culture. It is a very idealistic exercise. In Human Synergistics’ terms, the target culture is often highly constructive and devoid of the competitive and avoidance behaviours currently evident. Typically, the culture of a council in Australia will operate on the basis of ‘keep your head down and fly under the radar, if things go wrong blame someone else, and if there is no one to blame say you were just following instructions’. In a more competitive culture it starts with blame.
An organisational self assessment (the starting point for using the Australian Business Excellence Framework) will probably reveal an organisation where the drivers for the activities of the organisation that fare the best during the assessment will be those that have a legislative compulsion behind them or that have been developed in response to a problem that has a significant consequence for failure. The focus will be on compliance, not organisational strategy, innovation and customer or community value. This is understandable because councils do have lots of legislated responsibilities and accountabilities that have consequences for non compliance.
Now to the last and, I think, the most interesting piece of evidence – the risk appetite of top management (the Executive). This is interesting because it often isn’t documented and when it is, the context is usually the preparation of a risk management plan and the knowledge isn’t used to reflect on the decision making of the Executive, the organisation they have created, or its culture. Leaders shape the organisation through what they say and do. If they have a low appetite for risk, especially in a sector that is inherently risk averse, this will be reflected in their decision making. What can you expect to see as a result?
So, if you are wondering why you work in an organisation where there are dozens of forms that need countersigning by each level of authority, where decisions are increasingly being made by the Executive, and your culture surveys keep telling you that you are big on avoidance, maybe you should enquire about your Executive’s risk appetite.
Posted by Whistler
After watching an episode of ‘Ramsay’s Kitchen Nightmare’ I was tempted to write a brief script for an episode based on local government being a restaurant. I think it would go something like this (language moderated) …
GR: So, tell me, what is the name of your restaurant?
Response: Local government.
GR: Is that it? Isn’t it a bit generic? How will patrons know what to expect?
Response: We will give them what they always get.
GR: So, they get whatever they got the last time they visited local government? No point of difference from other local government? Are you sure?
Response: Yes.
GR: OK then. So, tell me, what cuisine do you offer?
Response: All of them.
GR: What?
Response: We offer all cuisines. We will serve any type of food that patrons want. They name it, we make it.
GR: If that is the case, how do you create atmosphere, give your patrons a great experience and ensure that you have the quality right, if you will try your hand at anything?
Response: We do our best. Our staff are well trained and they work very hard.
GR: I see. At least you will get points for effort! Can I see the menu?
Response: We don’t have one.
GR: What!
Response: We did have one but there are too many items to list. It was like a book. It had chapters in it!
GR: So, tell me then, how do people order? And how do they know what it will cost?
Response: Well, everyone pays an annual fee. Then they turn up and just tell us what they would like, how they want it prepared, and we do our best to deliver it.
GR: There must be a lot of dissatisfied customers. How do you know whether or not you have met their expectations and provided them with what they wanted? How do you manage your kitchen to have the required ingredients? How do you have chefs able to cook each of the cuisines well?
Response: There are problems with customers. Some of them are just impossible to satisfy! When they tell us they are not happy, we just try again. We do have to stock lots of ingredients and we do need a lot of chefs so that we can cater for the range of orders received. I can’t really see any other way of offering a service that meets the needs of everyone.
GR: This is amazing. I haven’t seen a restaurant like it before. To be honest, I can’t see how you run this place at a profit. You must waste a lot of time and ingredients.
Response: We do.
GR: Then how do you keep operating and why do people keep coming back?
Response: Well, we are the only restaurant in town.
GR: …
posted by Whistler
Local Government Utopia 