10 New Rules in Times of Economic Meltdown
This is a challenging new era for elected officials charged with governing in the midst of economic meltdown. Now more than ever it is important for the manager to support the elected governing body so it can address a whole new reality and govern effectively.
A DIMINISHED CAPACITY TO RESPOND
Unlike previous pullbacks, it appears that local government will experience long-term fiscal stress, undercutting its ability to respond to the big issues of the day. This financial crisis is not the result of the business cycle but a result of long-term structural issues.
To make matters worse, employees are feeling fearful, pessimistic, and even victimized. In a culture of fear, creativity cannot flourish and thus local government cannot overcome its problems.
10 NEW RULES
This diminished capacity to respond poses a confounding dilemma for elected officials. Candidates usually run on platforms that include making new community improvements or providing new services. After being elected and convincing their colleagues to go along, these governing body members have been able to direct staff to use “slack resources” to respond to ever-increasing community demands.
With the economic meltdown, there are no slack resources for new projects. In fact, ongoing budget cutbacks, layoffs, and demoralized employees all threaten the ability of local government to perform traditional service functions.
On the basis of our work with public agencies, we have crafted 10 new rules for governing communities in the midst of meltdown.
1. Identify the Core
To allocate scarce resources, top management must first help governing boards identify core versus non-core service or business areas. What are the things that the community holds most dear?
The chief executive of a northern California county, for example, contacted city representatives in the county to identify core and non-core businesses with the intent of identifying possible functions that cities may wish to contract out to the county, thus helping both entities.
The two core functions that cities wished to keep in-house were land use planning (determining the physical character of the community and promoting economic vitality) and park programming (affecting the quality of life in a community).
If they don’t decide at first on what is core, governing boards may protect public safety programs at all costs and potentially decimate library and recreation services, which the community could also see as vital to its well-being.
2. Focus on a Few Priorities
Once the core is clear, the chief executive must also help the governing board identify (with the help of the community) a few priorities (three to five at the most) and then relentlessly pursue those priorities with limited resources.
When new demands for local government action arise—as they most certainly will—the governing board can then insist that any new demand replace an existing obligation. Palo Alto, California, at one time identified 39 high-priority projects approved by the council. The list needed to be trimmed.
The council and the city manager together were able to identify and focus on five of the priorities. Banners were hung in the council chambers, one banner for each priority. When someone suggested a new priority, the mayor could simply ask which banner should be replaced.
3. Accelerate Through Subtraction
To aggressively pursue these few identified priorities with shrinking resources, the chief executive needs to engage the governing board in supporting the organization as it relentlessly subtracts. The chief executive, for example, can engage the organization and create a temporary “Office of Bureaucracy Busting” to help eliminate outdated or inefficient activities.
When we ask employees in safe environments how to save money or improve effectiveness, every hand goes up. Their ideas range from eliminating non-value-added, ritualistic activities to significantly reengineering and simplifying contracting processes.
To pursue a few priorities effectively or respond to new demands amid economic meltdown, an organization needs to “accelerate.” An organization cannot accelerate without subtracting.
4. Limit Requests for New Analysis and Reports
While governing board members may resist a community group’s demand to immediately respond to some problem with a new service, the board often directs staff to conduct an analysis or prepare a report. In good times, these kinds of governing board reactions to new demands may mollify constituents who make the service request.
In bad times, chief executives need to have a courageous conversation with elected officials so that they understand that board referrals to staff of nonpriority items simply divert scarce staff resources and undercut the ability of the local government to perform.
5. Have the Courage to Say “No”
Once a governing board identifies core program areas and a few priorities, it must stay focused and help the organization stay the course. Elected officials must have the courage to say “no” when groups make new demands. Of course, the city or county manager must also model the courageous behavior and say “no” to new requests for action and resources.
6. Avoid a Zero-Risk Environment
Local governments are notoriously risk averse. In fact, in our economic meltdown, the media, community groups, and sometimes elected officials seize on any mistake and criticize committed staff by name. In this environment, most employees will hunker down and avoid any risks.
To overcome the resource challenges, governing boards must encourage innovation. Examples include self-service kiosks, selling computer support or other services to adjacent public agencies, or sharing SWAT or fire ladder truck services with other jurisdictions. To innovate, employees must be encouraged to experiment, test out ideas, and remedy problems and mistakes along the way.
Bryan, Texas, used to award a “grand faux pas” each year. The worst but well-intentioned mistake of the year won. Chief executives and department directors must protect creative and risk-taking employees from abuse, and encourage governing boards to do the same. Otherwise, no innovation will occur regardless of exhortations from the dais.
7. Pursue Nongovernmental Solutions
Local government can no longer be the center of all problem solving. As challenges arise, top management can propose nongovernmental solutions involving private, nonprofit, and community partners. Chief executives can encourage elected leaders to focus on their convener and facilitative roles as opposed to proposing new direct services.
8. Free Up Monies for a Few Targeted Investments
Especially in severe budget times, a local government must make a few strategic investments to position itself for the future. The manager must help the governing board “overcut” so that the local agency can invest in such areas as employee development, information technology, critical capital improvements, energy efficiencies, sustainability initiatives, and strategic partnerships.
9. Provide Meaning and Emotional Support to Staff
Again, elected officials cannot achieve their policy agenda without the commitment of creative staff. In these times, governing boards can no longer throw money at employees (and money is a poor motivator). As Daniel Pink has told us, “Meaning is the new money.”
Consequently, elected officials as well as top managers should translate their requests to staff in terms of the meaning of the work. Elected leaders are key translators. When approving a new bike boulevard, for example, the governing board can explain how bike facilities will improve the community’s quality of life. Further, elected officials and top management can help the organization survive the difficult times by showing concern for employees, providing encouragement, and recognizing employee efforts.
10. Help Develop Talent and Rebuild Organizational Capacity
Ironically, it is in times of great fiscal stress that local governments most severely face the “free exiter problem,” meaning that organizational all-stars can freely exit and get a job—often for greater pay—elsewhere. For them to stay, they must be growing and stretching. In fact, learning is the new social glue that provides organizational stickiness.
To support employee development, chief executives must recommend to the governing body that it resist gutting the budget for developing talent. The good news is that these programs can be inexpensive. Cost-effective programs include talent exchanges with other agencies, internal leadership academies or educational webinars sponsored by a consortium of local governments, and interim or rotational assignments.
COURAGEOUS CONVERSATIONS
Certainly, following these 10 rules will not be easy for elected officials. Adhering to the new rules will require focus, discipline, and will. Perhaps more than anything, elected leaders must exhibit courage. In fact, courage has become the hallmark of effective governance.
Convening stakeholders, starting conversations, and engaging all groups in difficult decisions will become the core competencies of leadership in the midst of continuing disruption.
STEPS TO SUPPORT THE 10 NEW RULES
- Here are some immediate steps that managers can take to partner with their governing boards and promote the 10 new rules:
- Discuss this article with your management team and customize how top management can support your governing board in times of economic meltdown.
- Distribute this article to the governing body and discuss the reactions of its members at a study session and identify how top management can support them.
- Develop your own 10 new rules for managing in times of meltdown and discuss the draft list with department directors, other managers, and the governing board. Ask elected officials, as well as other managers, for their input as you finalize the 10 new rules for the chief executive.
- Schedule discussions with the governing board regarding core businesses, priorities, and non-value-added areas to subtract prior to developing the annual budget.
- Congratulate your elected officials when they make tough choices.
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