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Local government Gains Key Operational Insights

New Zealand Local government Gains Key Operational Insights from new Programme

The New Zealand Society of Local Government Managers, SOLGM, is encouraging more New Zealand councils to take part in an Operational and Management Effectiveness Programme that benchmarks council’s performance against other councils, in New Zealand and across the Tasman. Twenty six councils, a third of New Zealand’s 78 councils, took part in the survey for the 2014/15 financial year alongside 79 councils across NSW Australia and those councils recently received their reports.

SOLGM Chief Executive Karen Thomas said, “This initiative enables councils to better understand and manage their performance in key areas with communities, councillors and staff. It is a cost-effective means of identifying a council’s comparative strengths and, by benchmarking performance against like councils, provides insight as to what is working and where further work is warranted.

“The programme provides, at an affordable price, specialist insight from PwC in Sydney, tracking of individual business processes and comparative industry data trends.”

The survey reports on five key areas of performance to assist councils develop a deeper understanding of how they are operating: Corporate Leadership, Finance Management, Operations Management, Risk Management and Workforce Management.

While noting that there are some differences between NZ and NSW in respect to council operations, including rate capping which limits NSW’s councils’ ability to generate revenue from that source, the report shows that the 26 New Zealand councils are generally performing as well or better than many NSW councils. It has also identified areas where improvements can be made.

Highlights from the FY2015 sample Report include:
· Workforce Profile: While overall headcount in NZ councils grew by 2.8% in FY15 and stood still in NSW, in NZ there were 5.4 FTE per 1,000 residents compared with 8.2 in NSW councils.
· Gender Diversity: Women comprise 57% of the overall workforce in NZ councils compared to 41% in NSW. Women are also better represented in senior management in NZ: 23% of NZ council’s chief executives are female compared to 16% in NSW; 39% of NZ directors are female compared to 25% in NSW; and 40% of NZ council managers are female compared to 34% in NSW councils.
· Pipeline of female employees: NZ councils are actively building the pipeline of female leaders. Female managers were promoted at twice the rate of male managers in NZ councils in FY15, with a promotion rate of 7.8% compared to 3.9% for male managers. This suggests that local government is an attractive workplace option for women in New Zealand.
· Role of Finance: 92% of NZ councils have a CFO who is part of the senior leadership team, compared to 59% of NSW councils. Future focussed business insight activities consume 34% of finance effort among NZ Councils compared to 20% in NSW councils, and 92% of NZ councils report to management on a monthly basis, compared to 54% of NSW councils.
· Remuneration: Median council employee remuneration represents only 21% of total expenses for NZ councils compared to 38% of expenses for NSW. Likewise, the median council spend on overtime as a percentage of total salaries and wages in NSW is 3.9% compared to only 0.8% for NZ councils.
· Staff turnover in year one: The NZ median staff turnover rate of employees in their first year of employment is 16.8% (NSW 18.4%), However, the median overall staff turnover rate for NZ councils of 13.3% compares less favourably with that of NSW council’s 10.2%
· Source of Revenue: NZ councils derive 60% of their revenue from rates and annual charges compared to 49% for NSW councils. NSW rely on grants for 25% of their overall revenue compared to 10% in NZ, while NZ councils derive a further 13% of their income from user charges, 4% from interest and investment income and 13% from other revenue streams. Comparable figures in NSW councils are 17% user charges, 3% interest and investment income and 6% is derived from other income.
· Automated billing: NZ ratepayers appear to be earlier adopters of electronic rate notices with a median of 1% of total rate notices delivered electronically, compared to a median of 0.4% for NSW councils. Automated billing allows councils to reduce paper and postal costs, and improve cash collections. NZ councils also collect 32% of their rates via direct debit, compared to only 7% in NSW councils.
· Capital project expenditure: NSW councils spend a median of NZ$527 per resident on project capital expenditure, compared to a similar NZ council median of $506.
· Information technology: Only 39% of NZ of the 26 participating NZ councils have a formal IT strategy, compared to 62% of NSW councils, and only 12% of NZ councils rate their IT systems as effective, compared to 29% of NSW councils. NZ councils are focusing on automating service delivery (61%), incorporating mobile technologies (46%), and maintaining/upgrading systems (31%), and 30% of NZ councils also rate analytics and business intelligence tools as a priority.

Karen Thomas said, “While the survey’s results show that NZ councils might compare favourably with their counterparts in NSW, the real value of the exercise is that it provides participating councils with the information that enables them to better plan, prioritise and manage the resources they control so that they can further improve their operational effectiveness and service delivery to the communities they serve. As more New Zealand councils choose to take part, the programme will make an increasing contribution to ensuring that this country’s local government agencies are best in class.”


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