Ever wondered why the chief executive is never (almost never) from outside the public sector? Isn’t it strange how for years the public sector and local government in particular, has increasingly looked to the business and commercial world for ways of improving efficiency and cutting costs but when it comes to chief executives only appoints insiders!
Way back when I did my public sector MBA the case examples from business reengineering to customer care all came from the private sector. Mergers and outsourcing commonplace in the private sector are now a feature of the public sector. The radical changes in how we manage employees have been lifted from the business sector - for example performance pay, annual appraisals, zero contracts, and changes to sick pay as part of harsher absence management polices. So enthusiastic has the public sector been in adopting performance management, measurable targets and league tables we would find it very strange not to be judged on this data. And in a harsh financial climate where services are being withdrawn, day centres, libraries, museums and leisure centres closed you need a communications /public relations team to counter the negative comment and shape the local authority’s image. So what better than a chief executive from business and commerce who has first-hand experience of this way of working.
Unfortunately for those considering moving from the business sector not only has LA top management pay fallen further behind the private sector, the role is more than simply managing large staff groups and big budgets in a complex organisation. A local authority chief executive operates within a political environment. It has proved very difficult to recruit top people from the business sector into the top posts in local authorities because neither the potential candidates nor the local authority leaders seeking to fill the posts are convinced that someone who has not worked in local government could succeed in this environment.
The fact that the local authority has a leader and cabinet who appear to operate like a chair and their board in the private sector is misleading. The arrangement is not modelled on the private sector but on central government which is why there is a powerful overview and scrutiny committee in each council, providing a similar role to that of the select committees in Parliament that is holding senior officers and cabinet members to account.
In the private sector the board is a stabilising factor; the chair and board members tend to have a long tenure. This is in marked contrast to some councils where the leader and whole cabinet can be swept away at the next local election and woe betide the chief executive who is too closely associated with the previous administration. Even where historically one party has always held a large majority there is still scope for major upheaval. Where the majority is large the risk of factions and infighting is greater, being on the winning side after, ‘the night of the long knives’ is key to the chief executives survival.
Besides ensuring that a diverse range of services ignore self-interest and act corporately, a major role for the chief executive is to manage the relationship between officers and members not just officers and cabinet members. Members take their constituency role very seriously, they were elected to represent people in their ward, this can bring them into conflict with their own party. It not unknown for a member to vote for a particular strategy in full council in line with their party only to lead the local opposition to implementing the strategy in their ward. This could be the closure of a library or the siting of an industrial incinerator. Members are very sensitive to public opinion/pressure in their ward. Turnout at local elections is historically low so it may take fewer than 200 people to change their vote and the seat changes hands. This is much more likely to happen in local elections because voters are more willing to change their party allegiance than in general elections.
This political environment impacts on the business plan because the test as to whether a course of action should be followed is not simply is there a strong enough business case but is there the politically will? This is followed by is it politically doable? And in order for it to be doable what concessions and compromises will need to be negotiated?
In view of this it’s hardly surprising that council leaders have their doubts about top managers from the business sector successfully transferring. And once these business sector high flyers learn more about what’s involved in operating in a political environment they tend to decide it’s not for them.
Blair Mcpherson is a former director author and blogger www.blairmcpherson.co.uk .