Since 1974 we have seen the introduction of the Chief Executive Officer in to the world of local government. They arrived with the hated new counties of Avon and the rest cobbled together out of smaller cities and rural areas with differing senses of loyalty. They were introduced in the naïve belief that they would make local government more efficient and better managed, drawing on a false analogy with business. The bogus Counties have now been swept away. It is time to review what the CEOs have achieved and ask if the idea has lived up to expectations?
I know some very good Chief Executives in medium and larger sized British businesses. They all earn six figure salaries, but they deliver great value for their customers and profits for their shareholders. They have the following main responsibilities:
1. To deliver revenue growth, by selling more things to more customers.
2. To control costs – in the case of manufacturing usually to reduce the costs per item produced each year
3. To recruit, motivate, monitor and control a team of senior managers to run the business and through them to keep up morale and achievement throughout the company.
4. To report fully to the Board on performance, and to take a leading role in consultation with the Chairman in developing the strategy for the business.
In order to do this modern private sector CEOs have to work very long hours. Most larger businesses are global or widely spread, with CEOs having to travel away from home regularly to meet customers, visit suppliers and control far flung factories, sales offices and administrative offices. They are often away at week-ends. Their rewards contain a substantial performance oriented element that depends on delivering the profits in the budget, and their jobs are on the line if performance falls too far.
In contrast, the CEO of a Council does not face many of these requirements.
1. The CEO does not have to bother about revenue and customers at all. Most of the revenue comes from national taxpayers in a pre-arranged annual grant, and the rest from a local tax. All the Council does is send out letters to reluctant payers reminding them they will be put in prison or their goods seized if they fail to pay. Councillors deal with the “customersâ€.
2. Most Council executives present their Councillors at the beginning of the annual budget process with a long list of demands for extra spending, and claim that crucial and valued services will have to be cut if the higher administrative budget is not agreed to along with extra tax to pay for it. I have never met a Council CEO who thinks they can deliver as good or better service for less money (in the way industry has to to stay in business) and volunteers a cut in the Council Tax for the first budget draft. If cost control breaks down during the year in a particular service or area, the CEO simply presents a demand for revised budget amounts to be spent, raiding the contingencies fund and the Council balances to pay for it.
3. The CEO does help recruit the senior management team, and does have the task of guiding and chairing its meetings. However, Councillors are also involved and the responsibility is therefore more blurred than in a business. Council CEOs rarely in my experience monitor and manage absenteeism, one of the most obvious ways of watching morale. A CEO facing a problem of low morale is as likely to tell Councillors it is their problem than to fix it.
4. The CEO does not report to the Council in the way a CEO reports to a company Board. Individual Councillors have executive roles, and they are responsible for reporting to Council. The CEO is not usually allowed to speak at Council meetings, though in a way these meetings ought to be primarily reviewing the CEO’s performance at delivering the Council’s strategy. A well led Council does not need a CEO to craft or develop a strategy, as the strategy is the set of policy proposals and promises the majority group offered to the electorate when they secured their victory.
Some Council CEOs work long hours, because they may need to adjust their diaries to have time to talk to part time Councillors, and tbey may face difficult problems in particular services that need their help. I accept that many CEOs are hard working and well intentioned people. I just think the role they are in is ill defined and their actions largely governed by an ever tinkering central government. They do not have to travel abroad, find time for customers, and rarely work week-ends as Councils have all their meetings during the week. Many enjoy the benefits of public sector flexi hours, which allows the long week-end. Most CEOs now have CEO departments – to their salaries of £125,000 to over £200,000 we should add much more as pay for the staff who help them do their work. A typical CEO’s department is now spending several hundred thousand pounds and in many cases well into seven figures.
If Councillors wish to continue with CEOs to “run†their Councils, they need to get smarter at motivating and incentivising them. To some extent, with this government, the CEO will remain whatever the Council does a well paid clerk filling in forms and trying to meet box ticking requirements put on them in profusion by the central government. At the very least Councillors need to specify what the CEO’s responsibilities are, set some hard targets to hit, and to make some of the large payment to them only if they achieve the results. Surely, for example, the CEO could be set a tough target to cut the total administrative costs and outside consultancy budgets of the Council each year, instead of automatically budgeting for an increase? Most Councils start from a well padded budget in these areas. Those Councils which do offer some performance pay often adopt soft targets which do not stretch the executive concerned. It would be interesting to know how many CEOs have been denied all their performance pay for bad performance.
There are other models that could be used. A Council could dispense with a CEO’s department. The Council’s chief financial or legal officer could be made the chairman of the executive team, taking on the executive leadership role, whilst the Council’s strategy could be very clearly the responsibility of the Leader’s office. Alternatively, CEO departments could be slimmed down, and the different nature of the CEO role in local government from business recognised by suitable targets and monitoring of what the CEO can and should do.
The current system is not working. A rapacious central government keeps burdening local government with more and more things to do whilst often not offering sufficient grant to do them. At the same time local government can become careless about its own costs, resulting in unacceptable Council tax rises. Often a good Council is forced into extra administrative staff and extra external consultants to comply with the nit picking requirements of Whitehall.
March 29, 2008
Well said, indeed the same applies to almost any council job. I've recently received the charming "Hampshire Now" magazine explaining where my council tax money is spent. Apart from some really creepy "The leader replies" comments on page 3, it transpires we fund lots of young people to do various sports.
At a time when pensioners are being sent to prison for non-payment of council tax, I cannot help but wonder, if it's worth jailing very elderly people, so very young people can have some money which makes it slightly more convenient for said youngsters to play hockey?
I think not, and thus would cut the program. Indeed measured against this test, very little council spending is warranted.
Those who support the program (or any other) are surely effectively saying "this is so important, that if granny won't fund it, she's off to jail"
March 29, 2008
What was so very wrong with the former system (of town clerks, etc) that we needed this huge bureacracy to take its place? In this unprosperous rural area I am amazed at the number of employees our district council thinks it needs, some of them doing quite unnecessary jobs. And if the CEO doesn't travel abroad, some of the councillors do, at our expense. One I know has a well paid PA who has accompanied him to meetings in central Europe and elsewhere, which simply cannot have much relevance to the needs of this area. I can't imagine this system every being dismantled, now that so many people have an interest in keeping it.
March 29, 2008
Generous incentive performance bonuses for cutting the amount spent, the rate of council tax or the number of staff would also make them more like CEOs.
Since 80% of council spending is covered by the rate support grant any council which was able to achieve 20% efficiency savings would, in theory be able set a zero council tax rate. My suspicion is that, in practice, they would just find the grant cut. An impartial & replicable formula for the grant based on demographics rather than current spending would concentrate minds wonderfully.
March 29, 2008
What does the £2,000 a year my wife and I fund out of previously taxed income exactly provide?
The bins get emptied and, um, struggling on this one.
Oh, yes the neighbours children get to attend a school where nobody ever fails at GCSE and it is impossible to excel and prove yourself as a grade A at A level has become a common achievement.
March 29, 2008
Just look at the pages of your local telephone directory listing all the numbers connected with the undemocratic bureaucracy for which you are all paying (including their gold-plated pensions), and then look at their web-sites. All these departments are given budgets which they are encouraged to spend and then ask for more. They never have to generate any income. The more people they employ and the more they spend, the more successful and productive they feel they are. Any complaint is met with "Well it all comes down to money", or "Resources are short", never, "We will see what we can do to do better."
There also seems to be a two tier system for council work – those duties we expect of them like policing and sweeping the streets or looking after the parks and museums, are pared right down until they are almost not functioning, while the social and racial engineering empire is spared no expense.
Yet surely the best way to get a contented and well-behaved public is to provide safe and pleasant public places, and look after them? Nothing else should be done until this fundamental duty has been discharged.
March 29, 2008
An excellent analysis. The concept of a local authority senior administrator pre-dates professional(?) paid Counsillors, and is unecessary now. This is our old friend "comparabilty" back from the 1970's. In fact there is no comparability, as you say, no bottom line. And think of the hit on the pension funds. This is another public sector scam – all the senior managers connive at the appointment of a CEO on a huge salary on the expectation that theirs will rise accordingly. I noted a glaring omisssion from a booklet delivered to me with my Council tax demand explaining where my money is spent – no itemisation of the Council's running costs, ie salaries/expenses. You should note too that the evils of the 1974 Heath/Walker local Govt reforms are still alive in my part of the world. I live in an abomination called Cumbria, made up of Cumberland, Westmoreland and part of old Lancashire known as Furness. None of these areas has anything in common with the other and Cumbria has been total mess from day one. A good illustration of what happens when London based civil servants start trying to change things by drawing lines on maps.
March 29, 2008
£125,000 plus the £30,000 pension contribution. plus all the other benefits that go with these positions.
I agree, I've often wondered how the buck stops with this person and who ensures they're held to account. So much delegation both to consultants and other senior executives makes many of them just a 'photo head in the local papers'.
If a small, medium sized company had to spend so much on external consultants before any decisions could be made the owners would want to know why the senior executives weren't doing their jobs.
Must warn you though, speaking out like this won't get you many Christmas cards!
March 30, 2008
I read your article and then had a look at our council's website. There are 7500 staff for a population of 250000, they can get interest free loans, relocation packages, pension benefits etc etc. The jobs advertised are all "Guardian" type posts except for a school caretaker (only useful job and worst paid). All the services around here are sub contracted out so there are probably another 7500 or or more workers from private sub contractors on the payroll. I was surprised to find that so many people work for the council who only really have to provide what boils down to a few basic services. One wonders what all these people do all day, not a lot judging by the state of the place. Any CEO worth his salt with such resources at his fingertips should be able to produce a mini utopia. It shows the true calibre of the people in charge. I'd be interested to know how many of these council CEO's have been head hunted by private firms with no interest in council contracts. IE purely for their management expertise, not their dodgy contacts. None I should think.
March 31, 2008
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March 31, 2008
Unfortunately the very same CEO high pay questionable performance has been established in the NHS. The local hospital had a completely useless 'CEO' but the costs of departure were astronomical; no sure much has changed.
The same is true I understand for Council CEO's as the Council itself aren't in an easy position to dismiss them for poor performance and the dismissal costs can be comparable with the high numbers in the private sector.
It's time for Councillors to canvass on a promise to freeze if not reduce Council Tax.
April 1, 2008
An example of what a CEO may do can be seen on this link: http://www.liddellgrainger.org.uk/local/SOUTHWEST… or, alternatively, at: http://thebristolblogger.wordpress.com/
July 27, 2008
In 2007/2008 the cost of councillors in Hampshire was more than £5.5 million. Plus the contribution made to any that are in the Local Government Pension Scheme
http://www.isitfair.co.uk
April 20, 2009
I think the comments have gone slightly off of CEO and on to general council workers?
Would people prefer outside companies to look after and invest your tax money (maybe someone in the banking industry…….)whos sole purpose is profit and not sustainable living? maybe some in the council care about the area in which they serve, it is very easy to pass comments without providing thoughts on improving systems.
May 17, 2009
These comments seem to me to be true. I am a contractor at a council, and I have been working there for 3 years. I spend most of my days watching people for the most part sitting around gossiping and bitching about so and so. I've honestly never met a bigger bunch of complainers who get paid generously for turning up .. occassionally. Obviously, as a contractor, i don't technically work for the council, so I don't show up on any stats about being an employee. My boss attends meetings all the time, i think he attends meetings about meetings, and I'm convinced the only reason he goes is because he has nothing else to do. If he doesn't have meeting he spends the day playing with his mobile phone and huffing and puffing in front of his pc, probably browsing the internet ( i can't see from where i sit). When I first started I didn't know what working for the council was about, so I used to point out the lack of work and shouldn't we be doing stuff? Anyway , since then i've wised up and i'm learning to be like everyone else, a life less zombie, towing the line, and spitting out the council mantra. Honestly feels like some weird dream .. but I must learn to fit in!
January 2, 2013
Dear Sir / Madam and readers, As regards how councils spend our money is so easy when it is not theirs to spend, one of the many ideas that is being kicked about is to out source many services, if this happens only the contractors would make a profit out of ratepayers and any control by ratepayers would be lost, I feel we should look at it another way, perhaps councils themselves should be out sourced to say Tesco or Sainsburys at least they would run the local council properly and even make a profit for the rate payer!