At the 2015 Queensland LGMA State Conference Mead Perry Group hosted and ran a workshop session that explored the concept that Local Government is the quintessential employer of choice.
Various groups explored a range of issues and options but one constant theme was the impact that CEO turnover and difficulty in attracting to potential candidates to senior management roles has on Council performance.
Over the next few newsletters we are going to explore these matters. We hope to be able to enhance the discussion currently going on in the Local Government industry through the presentation of some balanced observations and ideas. The aim is to promote the understanding of the views of all parties and hopefully therefore to promote changes that will enhance Local Government performance and improve service delivery to the community.
No 1- Who would want to be a Council CEO?
Senior Management Separation
One area that was highlighted in our workshops as a contributor to perceived high turn over in senior management is the willingness of Councils to use the â€œNo Causeâ€ provisions of employment contracts.
So why are â€œNo Causeâ€ provisions in employment contracts a problem for senior managers in Local Government?
Post amalgamation in Queensland there has been well documented volatility at a councillor level with high turnover of mayors and councillors. Many of these new councillors had campaigned on a platform of reform. In many cases this reform is not only aimed at elected members but also officers including the CEO.
To state the obvious, this is no good for the CEO who may have little time to convince the new Council that during the previous term they had â€œonly been doing their jobâ€. That they were implementing the wishes of the former duly elected Council and that they will be diligent in doing the same for the new Council.
If they are unsuccessful in this, Council can conveniently use the termination without cause provisions or what are sometimes called the â€œcolour of your socksâ€ (COYS) clause of the officersâ€™ contract and have them go quietly away, often at significant cost to the community.
What are the perceived implications of the use of a COYS clause to remove senior management?
Having been in involved in numerous CEO performance reviews and contact negotiations we have identified the issues that particularly concern CEOs. They include:
So how did we get here?
- Waste of Council resources. The expense incurred in termination payments and the cost of recruiting a replacement that are not disclosed to the community. CEOs see this as an exception to the general requirement for mandatory disclosure and transparency and Council is not in any way called to account or required to justify their actions or the cost associated with it.
- Loss of reputation. The standard confidentiality requirements associated with COYS clause settlements mean that the reason for the contract termination is left to speculation and many CEOs consider that it has negative implications for their future in Local Government.
- Mental trauma. For a person who has spent their working life building a career in local Government, termination without cause can be traumatic and have devastating implications for years after. There is often a detrimental effect on other staff within the organisation with them losing motivation, morale and productivity.
- Impact on family. For many CEOs being terminated means that they have to leave the community, move - school, friends, partners, work etc is disruptive at best and devastating at worst. This is often the area that most concerns them.
- Division and dysfunction in Council. Whether successful or not, an attempt to terminate an officer without cause can divide a Council on the basis of their support for the officer. We have seen instances of this where a divided Council becomes largely dysfunctional due to the refusal of some Councillors to let go of their determination to terminate the officer.
It is apparent that post amalgamation volatility in Queensland has contributed to turnover and the use of COYS contract provisions. While we accept that political imperatives have contributed to this, we would also suggest that in some instances amalgamations resulted in incumbent senior managers being appointed to manage significantly larger organisations with the difficult task of working through the change. It is likely that some of these managers were not equipped to handle their new roles and therefore moved on or were moved on for that reason. Therefore it is likely that post amalgamation there was a number of factors driving high senior management turnover.
Hopefully that volatility will continue to settle in coming years but the common use of these clauses will continue to be a concern of incumbent officers and a deterrent to potential up and coming senior managers. Senior managers tell us that they consider their roles in the current environment to be high risk and that risk is not reflected in remuneration levels.
For those of us who have been in local government for some time we can recall when Shire / Town Clerks (CEOs) were not employed on contracts and as with public servants generally had security of tenure. This did not mean that they could not be terminated for lack of performance or misconduct but it did mean that a new Mayor and Council had to work with them and â€œsack the CEOâ€ was not election platform.
In talking to a range of officers about this, many of them would question the need for COYS clauses given that contracts generally have good protection for Council around performance and misconduct and the use of these provisions do not have financial implications for the community.
So is the removal of COYS clauses a likelihood?
If a review was conducted into means of improving the attractiveness of senior management roles in Local Government, perhaps removing COYS provisions would be considered but in reality it is unlikely that such a change would be mandated or become industry practice.
So what can be done to lower the risk to managers?
One CEO has commented on the need for a circuit breaker of some sort to allow for a reasoned dialogue to occur when Councils are looking to use COYS provisions.
So what could such a circuit breaker be?
- Increasing the payout. This would go some way to addressing the risk and negative impact for the manager and may give Council cause to consider if such a decision is in the best interest of the community. The people we have spoken to consider the standard 6 months payout to be too low and suggest 12 months minimum is more appropriate.
- Mandatory third party dispute mediation. This could require Council to undertake a process to make a case for the use of COYS provisions and justify the cost of payout and recruitment to a third party. This process could also involve a conciliation element to work through issues that have not been addressed.
- Mandatory disclosure / justification for use of COYS provisions. This is obviously a complicated idea. On the surface it would involve Council reporting the use of COYS provisions and providing the reasons for the decision. Given that contracts provide for termination for performance and conduct related action these should not be able to be used as reasons. If irreconcilable differences are claimed then Council should be able to demonstrate that some mediation was attempted. If the reason is that Council doesnâ€™t like the colour of their socks then they should disclose that and an indication of the cost of the decision and be held accountable for that decision to the community.
The solution to this issue is not simple but it does need to be recognised as an issue for Local Government across the country and hopefully our observations can assist in promoting discussion.