In terms of performance measurement, incentives for success and penalties for failure, public sector organizations operate in a paradigm detached from the rest of the business community.
Only five years ago the two New Zealand municipal governments of Christchurch (pop 338,000) and Hutt City (pop. 95,000) were operating in a way few private businesses would recognize. High taxes and notoriously poor services meant their “customers” were threatening to suspend business with tax revolts; internal morale was not much better. Today, Hutt City is winning business excellence awards against private sector organizations and Christchurch is so efficient that other municipalities look to it for guidance.
Considering the huge economic and social responsibilities of Canadian municipalities, understanding the Kiwi turnaround would benefit all Canadians, too.
Here are six highly effective habits that turned these cities from zeros to heroes:
Real change takes real change and it has to start with real leadership from the mayor, councilors, and senior management. At the bottom of the Hutt and Christchurch crises, the leadership set audacious goals for improvement if for no other reason than having no other option. So the first ingredient is a lift in the horizons of those at the top.
The leadership team cannot drive change alone. They aggressively recruited senior managers to help in their new mission. Pragmatism and fitness for purpose were their only criteria. They opened the island nation’s narrow shores to applicants from the likes of Australia and South Africa in search of expertise in each field. However, good people do not automatically do good work. Everyone knows that what isn’t measured isn’t managed, and the leadership was determined to bring strong goal setting and measurement into their organizations.
These were not just Thursday afternoon team-building exercises, either. In a pervasive system, every single resource in the organization was linked to part of a hierarchy of goals that the organization aims to deliver for city residents. For example, a water quality-testing goal constitutes part of a water treatment goal. This goal has meaning as part of a clean water goal that, in turn, makes up part of a headline goal of a healthy environment. Christchurch measures these goals with a “traffic light” information system. A red light in water testing becomes the responsibility of water treatment, who are responsible for making it green again. If they fail, their light goes red, and so on until the person with the ability to solve the problem acts.
At Christchurch, the information infrastructure of this system is custom-built software. All staff feed their results into this central system so that all activities can be monitored at a one-stop shop for the entire organization. Wise IT investment is a mundane but vital habit.
So far, we have attitudes, people, pervasive goal setting and smart IT, but incentives also matter. Staff are motivated by performance pay. At Hutt and Christchurch, good performance according to the goal-setting program can earn bonuses that are 30 percent above base salary. A hierarchy of goals means that everyone’s performance can be measured and rewarded. This combination of pervasive measurement tied to real incentives drives productivity at every level of the organization.
The sixth and final habit is a level of open and transparent reporting to stakeholders that one suspects would make most Canadian municipalities blush (with the possible exception of some B.C. governments). Annual reports set out the goals and their achievement levels with real numbers for achievement and failure. In addition to a having an organizational culture that values voluntary disclosure, Hutt City recruited external management-quality personnel from the private sector (based on ISO and Baldridge models). Once a culture of transparency is in place, celebrated success and honestly reported failure become cultural expectations on all sides.
All this is in stark contrast to the culture of most Canadian municipalities. A Frontier Centre study of Canadian municipal annual reports found that only a handful of our largest cities (mainly in B.C.) are producing reports on goals and achievements in a structured way. For the most part, they produce financial statements that account for inputs but fail to measure outputs.
Is snow cleared in a timely manner? How is the water pressure and quality? What recreational and cultural opportunities are organized and how many people attend? Oftentimes, the answers to questions like these are found nowhere in particular, perhaps nowhere at all.
This excerpt from Christchurch’s 2007 Annual Report exposes result-focused public sector organizations for contrast:
The 2,300 Council staff work together as one team to achieve [our] goals…We can be proud that as an organization we have achieved 80 percent of our targets – an increase of 5 percent on last year’s business result when we delivered on 75 percent of our targets…More than nine out of 10 (91 percent) residents say their overall quality of life is good or extremely good.
Is there any reason Canadian municipalities should not adopt this organizational culture? Perhaps it is time Canadian business insists that they do.
Peter Holle is president of the Frontier Centre for Public Policy, based in Manitoba.