By David Hammond, Head of Consulting & Public Sectors, Tribe.
Personally, I was not horrified by the removal of the four well-beings from the Local Government Act 2002.
Central Government is dialling up its influence on councils to refocus back on core infrastructure and cost control as the priorities it wants in the next period. I am a passionate ‘localist’ and an architect of the devolved Coromandel model of localism.
That said, I entered local government in 1992 – well before the four well-beings were a thing. In Southland District Council, we were doing the four-well-beings in the 1990s, leading in community development. Later, when the four well-beings came into Law, many of us in local government were scratching our heads about why we needed something in Law that we were already doing.
The entire country is going through this process of cut-savings and getting back to core priorities. While the public sector made the news headlines for job cuts, we know through our company that the pruning in the commercial sector was also very deep. ‘Listed jobs’ stats show us that the Government sector declined by 67 percent, I.T. by 53 percent, Customer Services and Retail both by 52 percent and Construction by 10 percent.
What are we learning about leadership in the era of cost-savings?
I work across sectors including Commercial, Maori, Sport, Health, Not-For-Profit and public sectors, and the work to help organisations adapt to cost-savings and core priorities has spiked. Most of this work is done directly with the chief executive, and sometimes with both the board and senior leadership team (SLT). Here are some real-world examples to illustrate how leadership is adapting.
Public sector
Tamati is a Chief Executive of a big public sector organisation with several thousand employees. He’s under constant Government pressure to cut costs. It is obvious where that will come from.
Tamati asked me to work with him and the SLT to gain the strategic focus the organisation needed to make tough choices. Through a lot of discussions and workshops, we found that a key for this organisation to move forward was to refine its core priorities – the thing that makes it distinctive and competitive. We refined its strategic plan back to four priorities from seven. Now, downsizing is based on strategy and positioning.
We then had a look at the SLT. Not all the members of the SLT were suited to an environment of cost savings and core priorities. Tamati had a large and flat-structured SLT with a mixture of abilities. To help him succeed in this tough time, we had to be honest; not all these SLT members were strategic, focused or commercial enough.
We worked with him on downsizing the SLT into a small and strategic group team that highly supports his role and focuses on ‘priorities’. The rest of the team was filtered into the broader ‘operational leadership group’.
My latest work with Tamati has involved locking in new and bespoke KPIs that reflect those core priorities.
Health sector
Helen is the Chief Executive of a health sector organisation with 92 percent of their funding coming from the Government.
That financial dependency has become a huge risk factor since the National-led Government has focussed on contracts and cost savings. Working with Helen and her Board Chair, we workshopped with the Board and SLT to encourage thinking on how to pivot and diversify revenue. Because contracts had 18 months left to run, any pivoting was needed now. This is a similar story throughout the Not-For-Profit sector.
In working with leadership, we started with pinpointing the ‘non-negotiables’ of the organisation that shouldn’t be compromised if they make a change and what their core strengths were. From that, they were able to develop a plan of using the capabilities they had in areas such as counselling to take programmes into commercial sector companies and diversify revenue.
Helen also had the same need as Tamati to raise the performance of her SLT. In this case, we worked with all of the team to raise their skills by designing something we call an ‘SLT Charter’ (similar to a Board Charter).
Helen was then able to lock their new commitment to the level needed of an SLT into new leadership KPIs to drive priorities and also raise the performance of the SLT.
Insights
In times of cost-savings and a focus back on core priorities in local government three insights are important:
Governance alignment: Strategic conversations requiring significant pivots or redefining of ‘core’ versus other work need an alignment between elected council and senior leadership. A council needs staff so they can understand the resourcing challenges to make change. Staff need the guidance and mandate of a council to make strategic change.
Core priorities: Cost-savings should not be scattergun. Our insight is to put design into what is core to the success of your organisation and what is not. The chief executive needs to have a backbone on this because every SLT member will think what they’re doing is core.
Senior leadership: SLT performance is under the spotlight and the quality of that SLT needs to be raised intentionally. In times of change and transformation, a tight team of genuinely ‘second tier’ is recommended.
They have to be completely supportive of the chief executive to drive tough change. We also highlight the need for bespoke KPIs for leadership that drives the delivery of core priority work.