Transforming Strategy into Action in Restructured Local Government Organisations - Middle Management's Role in Strategy-Led Change

Our first article explained how councils could win rather than survive in the new competitive environment facing local government. We proposed that councils first develop a broad strategy for achieving their vision then re-design their organisations to decentralise power for implementation of the strategy. Our paper also recognised that this may require cultural change and a new approach to performance management. However, strategy will not become action if middle managers continue to behave as they did under a hierarchical structure. This article therefore defines the role for middle management in transforming strategy into action. Middle managers in a decentralised structure will use the council strategy to define the limits of their business and the autonomy that they have within it. They will then employ this autonomy to cost-effectively satisfy their customers who may be internal or external to the council. This will require a very different approach to planning and performance management. Further, they must accept responsibility for leading cultural change within their unit. Operational Planning and Performance Measurement Our first article suggested an organisational structure within which Client Representative units (CRUs) interpreted the needs of council's external stakeholders and translated these into products and services to be supplied by Service Delivery Units (SDUs). Internal Support Units (ISUs) provide consulting services in, for example, training or information management in response to demands from both CRUs and SDUs. The Council Strategy will have specified the extent to which SDUs and ISUs are to be contestable or externally competitive. piper does, however, assume that contestability at least, is desirable, if not essential. We recommend a different, approach to planning and performance measurement for each of these groups. Ideally plans will run for three years with a yearly update at budget time. Client Representative Units We believe that the most suitable approach for CRUs is one that is commonly used to plan and evaluate government programs. It measures success in terms of desired community outcomes and identifies lower level outcomes that will make this success possible. The model also measures performance against these outcomes, making it possible to identify opportunities for improving particular work processes. Additionally it detects factors that have or could affect achievement of each outcome and attempts to bring these under control of the program. One would expect critical work processes for these units to be research of stakeholder needs, specification of projects, products and services that will meet these needs and procurement of these from SDUs or external suppliers. The appropriateness of these projects, products and services to stakeholder needs and the effectiveness with which it procures them will be measures of the units' performance. Service Delivery Units A commercial business-planning model is more appropriate for these units, similar to those used to attract funding for private sector businesses. The purpose of these plans will be to prove the commercial viability of each unit based on its positioning within a competitive market. The Council Strategy and consequent organisational re-design will have ensured that each unit is competing in a market in which it can be viable. However, it will be the business unit manager’s responsibility to structure and manage his or her business to capture the competitive advantage available to it within that market. Performance will be measured in terms of market share, return on investment and customer satisfaction. We suggest that plans contain strategies for marketing operations and financial management. The marketing strategy will first demonstrate how the business will gain (and continually update) an understanding of its markets and competitors. It will use this information to identify the products and services that it must deliver if it is to both satisfy clients and maintain competitiveness. Secondly, it will justify its pricing strategy. Finally the marketing strategy will explain how the business will promote its products, services and competencies both within and outside the council. The operations strategy will explain the improvements in work processes and practices it will introduce or maintain to deliver the products and services demanded by the marketing strategy. It will also identify the skilled resources, equipment, information and any other organisational support needed to run these processes cost-effectively within the Council environment. The financial strategy will forecast income from sales and cost the marketing and operations strategies. This will enable it to demonstrate how the business will either make the contribution demanded of it or remain within the budget allocated to it by the Council Strategy. Internal Service Providers The role of internal service providers will change markedly from that they held in a hierarchical or bureaucratic structure. In the new structure they can no longer dictate how operational units manage their people, information or other organisational resources. This responsibility will rest with the business unit managers. Their role changes to the provision of specialist expertise and services to support corporate needs and respond to demands from business unit managers. Examples of these services might be training programs, specialised computing solutions for managing work processes or employee surveys to uncover motivational problems. Plans for these ISP's will therefore be similar to those written by the Service Delivery Units and performance measures will reflect the ongoing relevance and competitiveness of their services. Performance Management of Individuals As mentioned above, in a decentralised structure, business unit managers must accept responsibility for managing the performance of their employees. To do this, they first translate business goals and desired cultural values into personal goals and competencies for their staff. Secondly, they appraise performance against these goals and competencies. Finally they help the employee to overcome any barriers to his or her performance. This last step may result in training and development or counselling for the employee. It may also uncover organisational blockages to performance like an unfair reward systems, cumbersome reporting lines or poorly designed jobs that dis-empower rather than empower employees. It is clearly the Business unit Manager's responsibility to remove these organisational blockages. Cultural Change It should be noted that Cultural Change is difficult and that some managers may need leadership development themselves before they can undertake it. Once they have these skills, middle managers can help their employees to embrace a new culture by providing leadership and ensuring that management policies and work practices within their units are consistent with the desired cultural values. Cultural Leadership Our first paper noted that while Transformational Leaders are rare, managers can learn and use some of the competencies that enable them to achieve cultural change. The most important of these competencies is to very visibly ‘practice what they preach'. To do this in an organisational setting they must effectively model the behaviours that they expect of their subordinates. One very important part of this leadership is to never show doubt as to the correctness of the Council Vision and to espouse support of it openly. Management Policies and Work Practices If management policies or practices within a unit are inconsistent with cultural values, employees will be forced to sacrifice one to conform to the other. When this happens, cultural change is always the loser for two reasons. First, it is inherently difficult. Second, non-compliance with policies or accepted practice often attracts punishment. An example might be a reward system that reinforces individual effort and quantitative targets when the new culture demands teamwork and high quality. Middle managers must therefore identify any conflict between the two and make the appropriate changes. They can lead change further by doing so very visibly. Conclusion This paper shows that while Strategy-Led Change must start at the top, the strategy will not result in action without the active involvement of middle managers. Some managers will find our recommendations require a significant change in their managerial style and expectations. However, they can overcome these difficulties with learning and a willingness to leave their comfort zone. Managers who do so will benefit threefold. First, they will be part of a winning council. Secondly their business unit will be more likely to survive in the new competitive environment. Finally they will have the satisfaction of managing a unit staffed by employees who are genuinely committed to the Council Vision and motivated to achieve it. Wouldn't this be worth it? An article by Leone Shueler and Kerry Feldman published in IMM Bulletin September 1996 For further assistance visit the Change & Perform website or contact the principal Kerry Feldman