Shared services – what’s in it for councils?

A survey of CEOs shows that local government is ready to explore the benefits of shared services, writes Clare McCartin.

Clare McCartin

As ratepayers continue to look inward at their local communities and become more invested in their own postcodes, the relevance and scrutiny of local councils has never been so strong.

Councils understand that they are operating in a world of increased expectations, and this has brought greater challenges and opportunities for leaders of local councils.

To get a more detailed picture of what this looks like and what’s at the top of the agendas of leaders we surveyed 110 CEOs of local government across Australia.

The findings, collated in the Australian Local Government CEO Index 2021, were grouped into top five priorities:

1. Digital transformation

2. Community resilience and wellbeing

3. Business confidence

4. Risk confidence

5. Building a high-performance culture.

Operating collectively

One key area that was a common thread in the responses from CEOs was further investment in the benefits of shared services.

With the constant threat of enforced council amalgamations by state governments, ongoing rate capping in some states, increased requests for hardship plans from ratepayers and the increased need to find extra funding, local government CEOs are looking closely at working collectively through shared services.

In particular, shared services within digital transformation was a key focus for CEOs with 68 per cent saying their councils were using shared services with other councils and 86 saying saying they were committed to pursuing opportunities with other councils.

I wasn’t surprised that shared services ranked so highly in the index, as it’s a topic that comes up often in our day-to-day conversations with decision-makers across Australia.

But what does this mean and how can local government CEOs make this work?

Prior to COVID, shared services had always been on the agenda, but not at the top. The Index findings showed us that this has been pushed higher on the agendas and even more interestingly it’s moved from a challenge to an identified opportunity.

Local government leaders are telling us that they need to make some significant, often daunting, changes to the way they are currently operating.

Some councils want to adopt a ‘quick fix’ approach and others are looking at longer term solutions with their neighbouring councils.

Many CEOs are still sensitive about the Auckland super city merger that saw the forced amalgamation of eight councils in New Zealand in 2009.

This is still often discussed in Australia, with many CEOs saying they don’t want to see that happen here and view shared services, among many areas, as an opportunity for them to lead change, rather than have it thrust upon them.

What CEOs are saying

South Gippsland Shire’s CEO Kerryn Ellis, told us local government wants opportunities to progress capability and services, and take advantage of economies of scale while also maintaining local knowledge and responding to cultural nuances within the community.

Domenic Isola, the former CEO of Hume City Council, said councils need to be agile, whether this is because of digital transformation, business continuity or other changes.

She says councils and their management need to commit to shared services, as well as looking at the asset side and determining how to best use assets with the potential of income generation supporting any cost cutting measures.

It’s clear that it is an area that can be further leveraged in areas such as the rates department, customer service, technology and other key areas that can be replicated and made stronger by combined resources.

Shared services should be seen as a game changer for many councils and a way to proactively address a number of key concerns as we pivot to the new normal.

It could also be an area that could help provide extra funding models, improve operating streams and a good opportunity to review current operations to ensure services are still fit for purpose in a post COVID environment.

If now isn’t the time to reflect on shared services, then I’m not sure when will be.

*Clare McCartin is Managing Partner Search & Advisory at workplace performance consultants Davidson

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