Balancing priorities – do councils face an identity crisis?

  • Zurich Municipal’s 2017 Senior Managers’ Risk Report examines changing attitudes about the role of the public sector in an era of austerity and commercialisation
  • As these changes take place, many local authorities face a growing identity crisis as they try to balance responsibilities
  • We explore the risks posed by this crisis of identity, and the importance of establishing and committing to new ways of working

The 2017 Senior Managers’ Risk Report is our fifth annual commentary bringing together the thoughts and views of local authority leaders from across the UK.

Last year’s report illustrated the regional challenges and varying ambitions and appetites of local authority CEOs across the UK. In 2017, we have seen a shift in conversation towards assessing the fundamental role of councils.

There is growing discussion, and in some cases alarm, among council managers about how ethical and commercial priorities fit together within the climate of entrepreneurialism and growing public sector commercialisation.

These discussions are far from being resolved, and as the report makes plain, most local authorities are between cultures as they consider “jumping out of the frying pan (of austerity) and into the fire (of commercialisation).”

We explore the identity crisis facing many local authorities as they try to balance responsibilities and plan for the future in this new environment.

What’s changed from 2016?

The major change shown in the report from the previous year, is that some councils are now one step beyond austerity. While many are still cutting services to manage new funding realities, others are instead looking at employing new business models, investing in growth and basing their financial futures on new commercial activity.

One contributor gave voice to concerns about the balancing act this new direction necessitates, explaining: “The danger is if councils lose their moral purpose.” These fears are justified according to some contributors: “Local government is being vilified more than the bankers were!”

With this commercialisation, and the difficulties it has thrown up, comes a dawning realisation that despite the changes, it is essential that councils remain closely involved with the communities they represent. This is particularly important given the erosion of trust following high profile local authority failures.

“Why are we here?”

In this climate, where many local authorities find themselves marooned between two conflicting cultures, a crisis of identity and the question “why are we here?” is looming large, according to our panel of local authority managers.

Most councils have made planned reductions already and increasing demand and demographic changes make further cuts hard to achieve. Commercialisation could be the immediate solution, but does it represent progress in the long term? As council bosses ask, “is our main aim to serve the public or make money from them?”

As councils face the challenge of adjusting to a more commercial way of operating, the report shows that a balance needs to be struck between the pursuit of revenue and responsibility to the public. One senior manager explained: “Trust and confidence will deteriorate if the public think we are here to make money.”

This balancing act has led conflict, even within single organisations, about what the primary role of a local authority should be.

The 2017 Senior Managers’ Risk Report makes clear that for councils to function effectively, these differences of opinion need to be tackled sooner rather than later.

Building a solid identity

Whether pursuing commercialisation, or combating austerity through alternative means, councils are changing. To function effectively, individual authorities need to establish what kind of organisation they want to be.

Regardless of the approach, most will need to change the skills and cultures of their organisations and adapt to new relationships and accountabilities.

Some CEOs are recognising that a move into new realms of profit-making activity requires an importing of skills and process from the private sector. A senior manager explained: “We have to compete with the local private sector. We will stand or fall.”

Without considering appropriate staffing, the complications presented by fresh revenue streams could cause more trouble than they are worth.

The personnel challenge also extends to keeping hold of staff. Not only are councils looking to recruit from the private sector, some are looking to poach talent from each other. Keeping hold of staff needs to be just as much of a priority as recruiting and retraining.

Councils should also prepare for the cultural change that incomers can bring. Once contributor put this clash of cultures in stark terms: “I’m here to run this as a business – my colleagues are here to run public services.”

Fragmented aims and a lack of solid identity and internal culture will make it harder to identity and attract the staff needed to make commercialisation a success.

Acting decisively

There is not a straightforward route to take in this brave new world, however the key to success will lie in acting decisively and at an early stage.

With commercialisation already being embraced across the board, councils are now competing with each other in a way seldom seen in the past. Any fragmentation, delay or unresolved disagreement will impede decision-making and action.

While a crisis of identity can feel almost inevitable given the scale of change being undergone at some councils, the 2017 Senior Managers’ Risk Report illustrates the importance of full and frank discussions aimed at answering the core question: ‘Why are we here?’ Whatever the final decision, it needs to be answered sooner rather than later.