Local Government and Benefits Management

Benefits have been all the rage in central government for the last few years, and are now starting to reach Councils as portfolio and programme management methods take hold. In most cases, this is still confined to isolated business cases and programme planning. However, there is significant scope for using benefits thinking more widely, given the uniquely portfolio-based approach that our activities are already structured in, thanks to the LTP.

In particular, there is a real opportunity to incorporate benefits into a key element of our existing planning processes – the ever-popular performance framework, complete with KPIs.

A common complaint with these framework is around the ‘line of sight’ – the link from aspirational-level community outcome, through to the daily operations used to form KPIs (picking up stray dogs, processing consents, fixing potholes etc.) Worse, that link is often missing for our frontline staff – impacting performance, organisational culture and strategic alignment across the organisation.

What are benefits?

Benefits are, simply put, the positive changes created by organisational activities. The good stuff that happens as a result of us getting out of bed and coming to work.

In order to be considered a benefit, a change must meet the following four attributes:

  1. Someone benefits
  2. There is a positive gain
  3. We can attribute the change to something we did
  4. We can observe/prove the change.

Why do they matter?

To demonstrate a return

Council activities don’t always fare well by traditional “return on investment” metrics. (Also the reason there aren’t many private providers of pools, libraries and parks… they don’t make any money.)

However, we know that we do offer a return to the community, government and other funders for their investment – this return is social, environmental and economic, as well as financial. And just because the return seems less tangible, doesn’t mean we shouldn’t be measuring what we do achieve to assess whether we are delivering value for money. In fact, I would argue that we have a duty to demonstrate this return to our ratepayers and funders for their collective investment by way of rates, user charges, subsidies and other contributions.  Benefits are a highly effective proxy for demonstrating this return

To focus on outcomes

One of the main criticisms of traditional Council performance frameworks is that they start with outcomes… but inevitably end up measuring inputs. While we can usually articulate the outcome we are hoping to deliver (safer buildings, connected communities, better quality of life), this thinking gets lost once we get to performance measures. Benefits provide a golden thread throughout the framework that require an outcome-focused measurement to match. If your KPI doesn’t measure your impact, it’s extremely difficult to tell a value story to your community, funders and Councillors.

To get better bang for our attention buck

Requiring Council activities to align with our overall vision and objectives means we inevitably focus our attention on the activities that offer the greatest contribution to Council’s objectives. From a performance measurement perspective, it means we achieve better value from our time investment, minimising the tendency to simply ‘measure what moves.’

Because government might give us more money

Identifying and monitoring benefits to understand performance is considered best-practice, with both NZ Treasury and the MBIE recommending a benefits-led approach to investment decisions. In an environment where Councils do not currently receive a share of the tax take and Councils remain subject to the generosity of central government funders, talking the same language and playing by the ‘rules of the game’ is a real asset when competing for scarce funding.

(Business cases are also critical here, and will be especially important for Councils hoping to get their hands on some of the Shane Jones fund. For more info, check out this handy summary on why Councils need business cases.)

Benefits Management in Practice

The number one application of benefits is to understand performance – at an organisation, programme, project or initiative level, the question is the same: did we achieve the positive change that we were seeking?

I was lucky enough to recently put benefits-led performance management into practice, working with one of my favourite Council clients. The brief was to redevelop the organisation’s performance management framework for FY19 and LTP18 – external, internal and business planning measures. Our initial objectives were fairly standard – simplify KPIs, reduce bulk, make reporting less onerous for staff and more interesting for Councillors.

Ultimately, we achieved all of those things and more, by applying some key principles:

  1. The performance management framework should be benefits-led – which requires an outcome-focused, community-oriented understanding of Council activities. We need to be able to articulate the benefit being delivered by our activities and ensure the metrics we track are an accurate demonstration of whether the benefit is being delivered.
  2. Reporting should be by exception – rather than a large volume of things tracking nicely, progress should only be reported to Council when there was a discrepancy (positive or negative). The tolerance for discrepancy is set at a group level and depends largely on manager discretion – enhancing the trust and agency in performance reporting.
  3. Measurement should be meaningful – if the measurement does not genuinely correlate to the benefit being delivered, we shouldn’t measure it (the obvious exception here being statutory measures.) This meant thinking outside the square a little and scrapping some ‘common sense’ measures that bore little relation to community impact.
  4. Continuous improvement – we won’t get it perfect first time, but we will keep getting better. All performance reporting now includes a follow-up for corrective actions promised in the previous round.

This project was a great success, using a collaborative workshop process to understand the current state of the organisation, and build organisational capability. By mapping the benefits that each Council activity delivered, we were able to have some robust conversations that led to:

  • A sleek, fully aligned performance management framework that links community outcomes and strategic objectives through to levels of service and KPIs. Benefits provided the golden thread and created an accessible, genuine language that resonated with elected members and staff.
  • A dramatically reduced reporting framework based on the information that Councillors find meaningful.
  • A meaningful reference point for elected members, officers and the community to understand the value or return being generated by Council activities.

For more information about how benefits management could improve your organisational, programme or project planning, take a look at the NZ Treasury guidance, or simply get in touch.

What does the new government mean for NZ Councils?

Local government business cases

This week has seen the announcement (finally!) of a new government, which presents some interesting changes for Councils, with the introduction of a new economic development fund and the renegotiation of key trade agreements.

A renewed focus on regional economic development

The incoming Labour-led government will introduce a $1 billion Regional Development Fund to unlock economic potential in as many regions as possible.  This includes working with Whanganui District Council to redevelop the city’s port, investing in factories in Gisborne, developing New Zealand’s primary sector, ensuring sustainable fisheries, growing the forestry sector and restoring a rural affairs voice at the Cabinet table.

Strategic planning and business cases will be critical

This regional focus represents tremendous opportunity for New Zealand Councils. Securing your share of the benefits will require a clear and shared understanding of what Councils and communities want for their future. Successfully obtaining funding and delivering results will depend on Councils defining and agreeing a strong set of shared objectives, based on a deep understanding of local and regional issues and drivers.

Councils will need to commit to mutually agreed measures and indicators to chart and evaluate meaningful progress. It is likely that feasibility studies and business cases will be required to acquire significant investment.

The Chinese are coming!

A parallel opportunity currently exists with the impending NZ-China Mayoral Forum in December this year. A strong community vision and set of clear strategic objectives will ensure Councils are in a strong position to identify and seize opportunities as they are presented in Wellington over the two-day forum.

The NZ-China Mayoral Forum is a product of the NZ-China Free Trade Agreement (FTA), which was negotiated under a Labour-led government in 2008.  The renegotiation of this FTA will now also take place under a Labour-led government. This suggests that the FTA renegotiation will strongly align with the government’s regional economic plans, so Councils should expect to see more trade and investment with China at this level.

The Maori economy is a force to be reckoned with

With the incoming government comprising all seven Māori seats, this could be another boost for the regions.  The NZ-China Mayoral Forum follows the Taniwha Dragon Economic Summit held in early 2017, where $138 million in deals between Māori and Chinese companies was achieved over two days. These deals will grow the Māori economy (currently valued at around $41 billion) and further strengthen Māori ties with China, which received 41 percent of Māori authorities’ total exports by value in 2015.

A recent University of Cantebrury study found that the growing Māori economy is driving Māori businesses to seek commercial opportunities with Chinese partners both in China and New Zealand. Further, Ministerial-led Māori trade missions to China have provided the needed leverage for Māori businesses to enter the Chinese market.

Councils keen to support business success with China can learn a lot from the Māori way of doing business with China. Māori and Chinese share a similar set of cultural values that influence business partnerships, including whanaungatanga  (relationships and kinship bonds), utu (balance), koha (gift and contracting) and mana (authority).  Māori emphasise building relationships with business partners, with short-term success often taking a back seat to developing mutual understandings.  Similarly, Chinese guanxi stresses the importance of building relationships that emphasise implicit mutual obligations, reciprocity, and trust.

For both Māori and Chinese, these ties translate into extensive power in shaping of business operations, and are a critical source of social capital and strategic advantage for business success. Through guanxi or whanaungatanga, utu, koha and mana, businesses receive insider information, raise their awareness of specific government policies, and gain exclusive access to resources.

Working together will become even more important

Achieving economic and social goals for local communities and maximising the opportunities offered by the new government and overseas investors will undoubtedly require Council, iwi and industry to work together. Critical to these partnerships will be a shared set of objectives that are geared toward mutual benefit, enabling strategic alignment between this partnership and overseas counterparts, who will have their own strategic goals.

Help is at hand (aka, a shameless plug)

Structured Conversations specialises in this space. Using structured techniques and international standards we work with Councils and community stakeholders to quickly and accurately understand economic and social objectives, identify barriers and formulate targeted strategies for success.

Our recognised industry experts can support your iwi, Council or business to prepare compelling strategic assessments and business cases, positioning you to secure funding and deliver benefits to your community.

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