Councillors can adapt

Council CEO Churn hits a high; why?

by Ruth McGowan

Councillors can adapt

Council CEO Churn hits a high; why?

by Ruth McGowan

by Ruth McGowan

Right now, if you’re a Chief Executive Officer in charge of a Victorian council, I reckon you would be hanging on pretty tightly to your seat.

That’s because the last two years have seen an enormous change in the local government sector with ‘CEO churn’ at an all-time high.

Thirty-Three. That’s the number of CEO roles that have been up for grabs across the Victorian Local Government sector in the past 20 months; a massive 42% in 2017 & 2018. And you can bet there will be a few more CEO roles up for grabs by the end of the year.

From tiny Buloke shire in the north-west (pop 6300) to the enormous City of Casey on the edge of Melbourne (approx. 300,000 people) both have recently appointed new CEOs.

It’s the same all across Victoria. From Moyne shire in the south-west to East Gippsland it feels like every second council has or is looking for, a new CEO.

Why the movement?

Given that there are only 79 councils in Victoria local government, it’s not considered unusual to have up to ten CEO roles advertised in any one year. However, recently, many of the ‘more-senior’ CEOs have retired and are enjoying a well-deserved break from what can be a full on (yet rewarding) job.

Ambitious, younger CEOs have moved to larger councils to advance their careers. Others simply haven’t had their contract renewed by Councillors or have been unceremoniously ‘moved on’ after failing to satisfy the elected representatives.

Perhaps the current surge in appointments has to do with the election cycle.

Under the Local Government Act, Councillors have only one employee to hire and manage -their CEO. Previous council elections (October 2016) saw around a 50 % turnover of Councillors. With a new bunch of elected representatives, sometimes Councillors don’t necessarily see eye-to-eye with the direction of a previous council. Fairly or unfairly, some may attribute past council action (or inaction) to the current CEO. As a result, sometimes Councillors will seek a change in direction by searching for a new CEO.

At other times, a CEO might see ‘the writing on the wall’ and choose to resign in their own time, rather than being ‘pushed’ by a new council. Sometimes a CEO may choose to leave in the middle of the Councillor term, enabling Councillors sufficient time to recruit a new CEO and settle him/her in prior to the next election (October 2020).

Does it matter?

What are the implications of this level of ‘churn’ in the sector and does it really matter? Perhaps change is good for Councillors who want to avoid complacency, and the risk of a CEO becoming complacent, or one who stops listening and delivering results.

How long should a CEO stay? A Harvard Business Review article on this topic suggests seven years, plus or minus two as  ‘a reasonable number: seven years is probably the period of maximum effectiveness for most people in what can be a very stressful job’[i]. They suggest there are three phases to a CEO job which evolves from the Entry stage to Consolidation and then Decline.

Ideally, a CEO will realise it is time to move on when they are “at that sweet spot of being at the peak of their performance, just before the decline”. 

Councillors need to skill-up

The other impact of all this CEO recruitment activity is that many Councillors who have never employed a CEO before, are suddenly finding themselves having to build their knowledge and skills around the process of executive recruitment, placement and performance management.

The fact is, that Councillors come from all walks of life and few have experience in hiring staff at the executive level.

Many simply don’t have the skills to employ staff at the level and salary of a contemporary Council CEO. Typically a council will spend approximately $30-60,000 on the CEO recruitment process. It can involve hundreds of hours of Councillors’ time as they engage a recruitment agency, advertise widely, select and interview candidates and finally manage the placement of the preferred candidate

At times, this means Councillors may put blind trust in the executive search agency and take a ‘hands-off’ approach when they really could be paying more attention to the whole process for their ‘one employee’.

It is important for Councillors to successfully manage the recruitment of a new CEO and get it right the first time. They certainly don’t want to waste ratepayers’ funds by having to go back to the beginning because of a ‘dud’ appointment.

Independent advice is important

Many Councillors are recognising the value of independent support to guide them through the CEO recruitment process.

Increasingly, as part of my consultancy services, I am being approached by Councillors who are seeking assistance from an independent expert who has no conflict of interest in CEO placement and can, therefore, advise Councillors on what they need to know, manage and avoid. They see this as an important investment in due diligence.

The importance of independent support in CEO employment has also been recognised by the Victorian State Government who have proposed a new Local Government Bill (currently before Parliament) to deliver greater transparency in CEO employment. The Act requires Councils to develop and adopt a CEO Employment and Remuneration policy and to obtain independent professional advice in relation to the matters dealt with the CEO employment.

There is an unprecedented level of CEO churn in Victorian councils at the moment. With all this change it is heartening to see many Councillors seeking independent advice and support with the recruitment process to help them employ an outstanding candidate for the council team, officers and the municipality. Please get in touch if I can assist.

Ruth McGowan OAM is a consultant to local government and supports Councillors as an independent adviser in the recruitment of their CEO. She is a former Mayor, Councillor and has been on a number of boards where she has been involved in CEO recruitment.

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