Why future council leaders will be natural risk-takers

  • Council leaders need to embrace a new attitude to risk if they are to lead their organisations through tough economic challenges ahead
  • The political leaders of the future will need to be natural risk-takers
  • Commercial awareness and negotiating skills need to be developed to ensure the best outcomes for their organisation

Local authorities make decisions that profoundly affect people’s lives, and it is understandable that with such a heavy burden of responsibility many council leaders are wary of taking risks.

Our recent round table with New Local Government Network (NLGN) on the future of local political leadership, concluded that in this era of austerity, with tougher economic challenges requiring “dramatic solutions”, leaders should be taking more risks, not fewer.

The roundtable focused on three key areas: attitude to risk, attitude to partnership and attitude to transparency.

Attitude to risk

The roundtable concluded that while some councils avoid risk for fear of failure, the impact of cuts and the search for savings will force councils to take a different attitude to risk in the future. Some council leaders will need to learn new skills, and become more commercially minded, in order to take advantage of opportunities presented by measures such as the localisation of business rates.

Although the roundtable agreed central government should do more to give councils the freedom to innovate for themselves, it highlighted examples of where councils have already successfully moved to a new way of operating.

For example, Barnet’s Easy Council model has seen it outsource its customer service and back-office functions to save an estimated £125 million, while Lambeth’s Cooperative Council aims to actively involve residents in the commissioning of services that affect them. For example, a group of young people working with Lambeth’s youth offending team decided how the team would spend £20,000 developing a new set of services to support them.

“At the heart of transformation, in many cases triggered by the imperative of austerity, lies the need to take more risk,” says David Forster, Head of Risk Proposition, Zurich Municipal. “Traditionally risk-averse organisations and management are rethinking their risk appetite as the challenges become tougher and more dramatic solutions are needed.”

Attitude to partnership

The need to commission and outsource some services in order to save money has not been universally welcomed by council leaders. Difficulties in procurement have led to some councils not getting value for money, resulting in dissatisfaction from the public. The roundtable observed that a culture of challenging and negotiating contracts is still not standard practice among councils, and many remain wary of entering into partnerships for fear of being left out of pocket.

To partner successfully, council leaders need to have the commercial awareness to negotiate good deals, and to see collaborative management (e.g. board structures for managing contracts) as integral to their leadership practices.

Building a reputation for successful enterprise can reap rewards – Greater Manchester, for example, has achieved increasing autonomy from central government on the back of its successes in devolving more power and responsibility to its citizens.

It was the first place in the country to adopt the Combined Authority model and has “led the way in new forms of financial devolution” according to Manchester City Council leader Richard Leese.

Attitude to transparency

The roundtable observed that as councils become more involved in commissioning and partnering, and less involved in the direct delivery of services, their relationship with the public and the public’s understanding of their role, has receded. This in turn can lead to a combination of unmanageable expectations and equally ungovernable cynicism.

To avoid this scenario, councils should ensure they are carefully scrutinising all contracts, and be transparent with the public about their procurement process, including publishing details of tenders and contracts.

The way ahead

David Forster concludes that future local political leaders will be ‘natural risk takers’.

He says: “In the future, leaders and chief executives will need to have two critical skills: the ability to have a shared vision of the future, and the trust and confidence in each other to take more risk, in order to deliver that vision.”

Future leaders, both political and managerial, will be natural risk takers

David Forster, Head of Risk Proposition, Zurich Municipal

He adds: “Future leaders, both political and managerial, will be natural risk takers, with the governance, tools and techniques to exploit the risks, while minimising the potential for adverse effects. The world has moved a long way from thinking about risk as exclusively negative and exclusively operational.”

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