Managing in a Political Environment: Views of Local Authority Chief Executives
By Richard Penn
This article was first published in Public Management and Policy and is reproduced by permission of the Association. http://www.cipfa.org.uk/pmpa/index.cfm
Every year a sizeable number (20 or more) of the 400 or so local authority chief executives in England and Wales prematurely leave the organizations they lead. Most go unwillingly—the victims of a breakdown in the relationship between themselves and their employers. Despite this, departures are generally achieved quietly and largely consensually, although there have been a few recent cases—David Bowles in Lincolnshire and Sari Conway in Eastbourne for example—which have produced a great deal of press coverage.
Statutory Protection in Practice
A local authority’s ‘head of paid service’ (normally the chief executive) has statutory protection from dismissal as does the chief finance officer and the monitoring officer. The effect of statutory protection is that no disciplinary action, including dismissal for any reason other than redundancy, ill-health, or non-renewal of a fixed-term contract, may be taken by the council against these officers except as recommended in a report by a ‘designated independent person’ (DIP) and no notice of dismissal may be given without the approval of full council.
Councils have recently been making increasing use of the DIP cases (seven in England, one in Wales) in the past two to three years and about the same number again where it has been a background feature. The explanation appears to be multifaceted:
•The relationship dimension. Senior managers, appointed to serve the whole council, used to survive a change of political administration ‘as of right’. Over time, a tendency to seek a change of chief executive on change of administration became more common and has extended to a change in political leader(ship).
•The accountability dimension. The creation of political executives was designed to make decision-making more transparent and accountable. The use of performance indicators, league tables and CPA has put pressure on councils judged to be under-performing. Rightly or wrongly, those political executives have passed the accountability onto their senior staff, especially chief executives, and decided they need to make a change.
Against this background of greater volatility and accountability there have been three trends:
• Chief executives are being appointed younger and are often under 50 when problems arise. They are unable to retire on attractive pension terms and so are more likely to try to remain in post. The situation will worsen when the age of access to pension rises to 55.
• Older chief executives, able to agree departure terms with their employer, can find the deal being undermined by the external auditor. Auditors have helped to establish case law restricting the generosity of departure terms and challenge proposed settlements or, even worse, unpick those closed some years earlier.
• Executives seeking to replace their chief executive in difficult circumstances can be concerned about media reaction. The increased transparency around departure terms means they are likely to be asked why they are paying off a chief executive perceived as successful, or alternatively why they are rewarding one who is considered to have failed.
A combination of the difficulty of negotiating acceptable terms, coupled with the problem of handling media perceptions, appear to be the main drivers behind the increasing tendency to threaten to involve a DIP and actually doing so. As cases have become more formal with references to DIPs, so they have become more concerned with legal issues and that has increased the time and cost involved.
The Association of Local Authority Chief Executives (ALACE)—the chief executives’ trade union—has been invited by the ODPM to comment on the difficulties that arise between statutorily protected officers, especially chief executives, and their councils and the optimal means of resolving them. It will recommend that as an alternative, or addition, to making improvements in the current system, there should be ‘pre-nuptial’ or contract severance agreements for officers. It is common for those in the private sector taking senior posts to negotiate leaving terms at the time of appointment, along with pay and other conditions. The company and the individual accept that there might be clashes of style or personality or philosophy in the short term, or as a result of changes to other posts, or that a time might come when a different approach is needed and that means a change at the top. This is a mature approach, which attaches no blame; it simply recognizes the reality of relationships and manages the risk from the start. If there is a need for a parting of the ways, it can be done quickly and with dignity.
Contrast that with the situation in local government. There is no preplanning and difficult relationships fester while the parties struggle to find a way out. Unless the chief executive finds another job, the situation deteriorates. The council has no valid grounds for dismissal but wants a change. Depending on the age and length of service of the chief executive, the flexibility of the council and the attitude of the external auditor, a deal might be possible. If not, recent experience suggests that a frustrated council will look for reasons to initiate disciplinary action and relationships breakdown totally while these processes are played out.
The council often spends a considerable amount on specialist employment and legal advice and perhaps an interim chief executive. There is a debilitating effect on the rest of the staff. The suspended chief executive often becomes stressed and requires medical assistance. Whether or not the case reaches the national media, it usually damages the reputation of the council and its leadership and, sometimes, the chief executive. If the chief executive is old enough to retire they are lost to full-time work in local government due to pension claw-back provisions. Those who are younger rarely continue in local government: this can be because the prevailing culture sees them as failures and/or they are so bruised by their experience they will not risk repeating it.
At a time when there is national concern about a dearth of strong leaders for the most senior posts in local government, it is counter-productive to have arrangements which damage the image of councils, certainly in the eyes of those considering promotion, and constitute a brain-drain from the industry. Some say that a pre-nuptial or contract severance contract would make divorce too easy; that on a change of administration the members would invoke it to employ someone they were more comfortable with, without giving the incumbent a chance to prove themselves. There is such a risk, but a provision for mediation could be built in. In any event, the objection is grounded in the existing culture that sees the ousted chief executive as a failure but the point of moving to pre-nuptial or contract severance contracts is to change the prevailing culture. There is also a risk that councils would use the new climate to appoint chief executives more aligned politically with the council. However, that happens already despite the constitutional safeguards covering appointments and, so long as the post holder operates within the law, it doesn’t really matter.
The aim must be to streamline the regime for the parting of the ways of the three statutory officers (it could be extended to other senior posts) in cases of total relationship breakdown in a way that is fair to all concerned. Retention of statutory protection will protect the post holders from the worst political excesses.
If legitimate concerns exist about misconduct or incompetence, councils will be able to take appropriate action in the public interest. Where these concerns are invalid, the departing staff should have no taint of discipline on their records and should be rewarded fairly for the loss of their contract and reasonable expectations.
The Society of Local Authority Chief Executives (SOLACE) has also addressed the problem of ‘casualties’ among the ranks of those officers. It established a Commission (comprising council leaders from each of the three main political parties, serving chief executives, business leaders, a former permanent secretary, representatives of the media, the law and academics) in early 2005 to investigate how effective management might best be achieved in a political environment at the local level. The Commission’s report, Leadership United, contains a range of recommendations, the key ones being:
• Chief executives should always form part of the appointments panels for the officers who report directly to them and that members should consider seriously any advice that they give.
• Good communication has to be planned, developed and nurtured. All new chief executive and leader pairings should give consideration to how this can be best be established.
•All governance bodies, including possible new neighbourhood forums or committees, should be required to audit their governance arrangements according to the Langlands Standard or the CIPFA/ SOLACE Corporate Governance Framework.
• Political parties, both locally and nationally, may wish to consider whether they could and should be doing more in terms of identifying the future skill base needed for politicians, using selection methods that ensure potential against these, appraise the performance of those that are elected and put in place training and development programmes to help develop the politicians of the future.
•All authorities should take a careful look at the capabilities of their staff, senior officers and politicians in the area of managing in a political environment, identify the gaps that exist, consider what training and support would be needed to fill those gaps and then, with the help of professional training advisers, prioritize and address their training and development needs.
•The Standards Board for England should work with the LGA, SOLACE and the Association of Council Secretaries and Solicitors to develop a national framework within which there is greater scope for local resolution of standards issues.
• Chief executives should continue to have statutory protection from dismissal based on perceived
political differences that are not based on underperformance or misconduct.
•When confidence does break down between a leader and a chief executive, attempts should be made to resolve the matter amicably. If this is not possible, external auditors should take a stance which has the long-term interests of the council and the citizens it serves at its heart and in a way which is consistent with the way similar disputes have been handed in other authorities.
•Political parties should devise clear procedures for dealing with councillors accused and found guilty of breach of council or national codes of conduct and ensure that all councils apply them rigorously.
This is a major issue for local government which demands an urgent and honest reappraisal of the relationship between councils and their most senior managers in the interests of the councils, the officers concerned and the communities they serve. I can only hope that those in central government who hold the keys will seriously consider the SOLACE and ALACE solutions in the interest of all concerned.
Richard Penn is a PMPA Executive Committee member and former Chief Executive of Bradford City Council.