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Speaking to the Daily Mail in March, sources at the department for Communities and Local Government argued

Emperor Marcus Aurelius, Palazzo dei Conservatori, Rome. Photo: author’s own

that “there was really no need for councils who opt for an elected mayor to have a chief exec – because the mayor can take on the executive role and could deal with the directors of various government departments himself.”

Since then, most of England’s cities have rejected the government’s proposal for directly elected mayors, but what of the argument that elected mayors should take on the role of chief executive?

As I have argued before, while some councils will re-badge their senior officer, not many will experiment for long without a senior officer. The reasons for this are well argued in a new report by the Group of 30, an international grouping of central bankers and senior financiers. In their paper on governance of financial institutions they outline 10 tasks that well-functioning boards should discharge. Two in particular concern the role of the chief executive:

Appoint the CEO and gauge top talent in the firm, assuring that the CEO and top team possess the skills, values, attitudes, and energy essential to success. A very good CEO is preferable to a “star” CEO. The board must confirm the appointment of independent members of the executive team, including the chief risk officers (CROs) and head of internal audit, and should be consulted with respect to other very senior appointments. Boards should maintain a focus on talent development and succession planning, which are critical components of organizational stability.

Respect the distinction between the board’s responsibilities for direction setting, oversight, and control, and management’s responsibilities to run the business. It is misguided and dangerous to conflate the responsibilities of management with those of the board. The board’s primary responsibilities include: (a) reaching agreement on a strategy and risk appetite with management, (b) choosing a CEO capable of executing the strategy, (c) ensuring a high-quality leadership team is in place, (d) obtaining reasonable assurance of compliance with regulatory, legal, and ethical rules and guidelines and that appropriate and necessary risk control processes are in place, (e) ensuring all stakeholder interests are appropriately represented and considered, and (f) providing advice and support to management based on experience, expertise, and relationships.”

The Financial Times today reports on the woes to befall Jamie Dimon the chairman and chief executive of JP Morgan Chase and quotes Robert McCormick, chief policy officer of Glass Lewis & Co on the joint role “It is potentially insurmountable conflict. How can you oversee yourself?”

This idea of checks and balances is as essential in the corporate governance of democratic institutions as it is in financial institutions. Human beings are not omniscient creatures, we all require advice, cooperation and partnership to achieve all but the most simple of tasks. It is no dilution of democracy to recognise that political leaders also require others to achieve their goals. And of what value is it to be surrounded by people whose roles you think you can do better than them? JP Morgan Chase seems to be the latest to discover the myth of the emperor-like, all-powerful leader who acts without any real challenge to his authority. Without the cooperation of others who bring new capacity, knowledge and skill, leaders ultimately deny themselves any hope of success. Eric Pickles should listen to the bankers in the Group of 30 and stop encouraging mayors to go macho.

Here’s a slightly longer version of my piece the LGC has published this week (behind the paywall). This fuller version includes some examples from the archive ….
2011 ended on a particularly sour note for a number of chief executives who found themselves unwanted by their political bosses. After the surprise Wiltshire defenestration, we had the tortuous, self-mutilation in Kent followed by the brutal re-branding of Reading as the issuer of press releases least likely to attract future talent. Aside these most dramatic examples, there was a flurry of other departures leading many to suspect foul play behind the most innocent of early retirements.

Defenestration (in Prague, absolutely not in any UK local authority)

However, taken together with ministerial malice and local political machismo, these events have made some on the local government circuit wonder whether chief executives are about to become extinct.

It is certainly true that it is a hostile environment for senior professionals right now, with councillors  from all parties cutting senior staff as a symbol that the council shares the community’s pain. Of course, some politicians will see this as an opportunity to bolster their own power base, but these will be the exceptions to the rule.

What we see today is a new staging of organisational dramatics, designed to play to external audiences as much as anything. This is as old as theatre itself, of course. It is often gory to watch, it is rarely good value for money, but it allows politicians frustrated by their impotence in the face of the cuts, to put on a show to the voters that they are in control of something, at least.

We frequently see these issues after elections, when new leaders come to power, and we have seen it before during the transition to cabinet government. But normally these are short, if recurrent, trends that lead to evolution, rather than revolution, in the chief executive’s role.

Indeed history is littered with the senior officer casualties who have had their wings clipped, and then with the bodies of politicians who fly too close to the sun. And while the top job remains a cross between a permanent and a political appointment, that risk will remain. The flip side is that many relationships thrive on that tension and ambiguity.

None of which is to say there is nothing new. The particular mix of poisons this year is particularly toxic, and I have no doubt that more of my former colleagues will meet gruesome ends in 2012. But I do not believe that politicians will, as a whole, decide to dispense with senior, independent advice or that we face the end of chief executives as such. Local government has a long and varied history and it is difficult to do anything wholly original. On the appointment of a chief executive again after 10 years operating without one, the then leader of North Tyneside said, “What seemed right in 1992 is now different in 2002.” What goes around comes around.

From the archive

January 2000, Bristol make chief executive post, held by Lucy de Groot, redundant.

July 2001, 4 senior officers share chief executive post in Birmingham while the council consults on new political executive arrangements.

April 2002, North Tyneside announces it will reappoint a chief executive after ten years without.

June 2003, Labour leaders in Hull propose to delete chief executive post remove the chief executive role and run the council through a head of paid service, a city treasurer and a town clerk.

July 2003, Mike Whitby, leader of Birmingham, proposes to put chief executive post, then held by Lin Homer, on an annual contract. Chief executives needed, “more incentive to do well in the job at an earlier stage,” he said.

Today’s report by the Audit Commission and the LGA on the future of the local government workforce re-states some stark statistics.

“Government funding for local government will fall by 26 per cent, or £5.5 billion, over the period covered by the Spending Review (2011/12 to 2014/15), and councils must find most of the savings in the first two years. Because staff account for nearly half of all spending by councils, workforce costs have to come down.”

In England, the report adds, local government has already lost at least 145,000 jobs.

The study suggests fairly bullish attitudes to transformation, as you would expect, and outlines some concrete examples of future outsourcing. But the report also says that councils intend to “extend competition to cooperatives, social enterprises and mutuals” (Work in Progress, par 69). This is interesting, but does competition exist between cooperatives and mutuals? is there really a competitive market? Are there any examples of this already?

Of course, it is part of councils’ role to make markets to meet their needs, but how far down this road are we and is this a credible strategy for major cost saving in the short to medium term? If it is, where is this happening? And if it is not, are some councils still unwilling to talk about traditional outsourcing.

Incidentally, the Guardian has an interesting piece on the outsourcing of Islington’s education service by Mark Taylor director of schools, Cambridge Education. This is written by the outsourcer, any other perspectives?

A little over a year ago, I was called to a meeting with two senior civil servants, from two different government departments, to be briefed on the government’s public service reform white paper, Open Public Services. The aim of the paper was to present a new angle on the government’s strategic agenda. Yes, there was austerity, yes there would be cuts, but the white paper would present the positive case for reform, joining up the change agendas in health, police, schools and local government. It was explained that, at the next election, the government wanted to be able to say more than it had cut the deficit. It also wanted to be able to articulate its underlying strategy and achievements in public service reform.

 


However, the white paper, as then drafted, never saw the light of day. It was caught up in inter-governmental disagreement, partly between Conservatives and Liberal Democrats, partly between departmental interests, and partly between those who believed in harder or softer policy. In the end the paper was re-written several times and, although accompanied by a strongly worded article by the Prime Minister in the Telegraph, it was eventually launched to a bit of a shrug of the shoulders from public service chief executives. Everyone could see its pro-market  rhetoric, but what impact would the words on the page actually have in the real world of services designed or commissioned? It was written as if market forces didn’t already exist in great swathes of public services and yet had little to say about how more would be done in this direction.  Furthermore, perhaps because it was read as a post-hoc attempt to make sense of existing (and much harder-edged) policy commitments in health, police, schools and local government, it had nothing like the bite of those departmental drivers.

Interestingly, therefore, Ben Brogan at the Telegraph has an update today saying that “Downing Street is starting all over again on public service reform.”

I agree with Fraser Nelson who says this is “depressing,” but it is not surprising. The white paper was always a bit of a badge, stuck on to create the impression of change, but running the risk of over-promising what the government had no idea how to deliver.

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