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· Inspirational leadership is critical - but on its own, it’s not enough
· Local governments falling short in four key areas
· PwC suggests an ‘agenda for action’ to make things happen
Inspirational leadership is critical if cities are to implement their strategies and deliver the outcomes their stakeholders deserve. But leadership on its own is not enough, and local governments are failing to build the capabilities they need to overcome the challenge of execution in several other key areas, such as adequate financing, agility in their organisations, and comprehensive performance and risk management.
These are some of the findings in the latest PwC report focusing on the challenges facing today’s cities and local government organisations, entitled Making it happen: A roadmap for cities and local public services achieving outcomes.
This year’s survey by PwC of local government leaders around the world including Auckland, Wellington and Dunedin confirms leadership is critical to the development and execution of an organisation’s strategy. But with public, private and voluntary sector organisations collaborating to deliver public services, all stakeholders need to be aligned in order to maximise the chances of success and being able to do more with less.
The good news is that the latest survey of local government leaders reveals an encouraging 69% have a strategic vision for their city and 48% say this vision is being implemented, is having an impact and is regularly updated.
The survey also indicates local governments are rightly reaching out to their external stakeholders in designing and implementing their strategies. So most local governments report the need to partner collaboratively with private (87%), public (82%) and voluntary (77%) sector organisations to deliver their strategies.
A similar picture emerged when the questions turned to service delivery, with three-quarters of survey respondents saying they currently use public-public and public-private partnerships as well as public-voluntary partnerships (50%).
Leadership is seen as by far the most important factor in enabling strategy implementation, with 78% emphasising it. In fact, 80% of respondents believe leadership has already had a positive impact on strategy implementation, rising to 88% in developed countries.
Hazem Galal, PwC Cities and Local Government Network Leader says “Whilst we agree leadership is crucial to strategy implementation, in our view leadership on its own is not enough. Our survey reveals that, of the other internal management capabilities needed to accomplish a city’s vision, local governments are falling short in some key areas.”
These key areas are:
· Financing: seen as the biggest barrier to implementing strategies by 67% of respondents. Only 28% have a strategic plan underpinned by a financial plan, with key risks properly assessed and mitigated
· Simplifying, standardising and streamlining: it seems that size matters, with larger organisations reporting less agility and being less able to get things done quickly. Organisations with fewer than 3,000 employees seem more likely to involve all levels in a more highly collaborative process (37% compared to 15%), have a less negative impact on strategy implementation arising from the number of decision-making levels (21% compared to 38%), and complexity in their organisations (20% compared to 53%)
· Implementation planning: only 19% of respondents have a comprehensive implementation plan – in fact, 22% had no plan in place at all, rising to 40% in developing countries.
· Supporting frameworks and tracking systems: only 11% of respondents have in place a comprehensive performance management framework, which is fully aligned to the organisation’s strategic objectives and supported by transparent reporting of performance to the public. And only 16% have a comprehensive risk management framework in place.
So what needs to be done? “We believe there’s an urgent need for cities and local government organisations to prioritise their activities and develop a roadmap to ensure they have in place the internal capabilities and external relationships needed to deliver efficient and effective strategies,” says Hazem Galal. “With the mantra ‘do the same with less’ ringing in their ears, local governments must focus on outcomes in order to make things happen – and quickly.”
The ‘agenda for action’ should include:
· Investing in their capabilities around financing.
· Re-designing their organisations to enable more effective collaboration with primary stakeholders.
· Assessing the impact of their size and scale, seeking out ways to standardise, simplify and streamline their operations.
· Introducing systems to measure outcomes and value for money.
· Developing implementation plans with clear roles, responsibilities and timetables for actions.
Is this agenda relevant for New Zealand? “The Royal Commission on Auckland Governance raised a number of similar issues, such as the inability of Auckland to effectively relate to its primary stakeholder, central government. More recent developments relating to financing proposed transport projects reinforce this relevance” says David Walker, PwC New Zealand Local and Regional Government Leader.
This latest report builds on the insights from PwC’s Global Cities and Local Government Network’s ground-breaking publication ‘Cities of the Future’, last year’s report ‘Seizing the Day’ on the impact of the global financial crisis, and the experiences gained by PwC professionals working with clients.