Christchurch City Council

New Zealand is attracting considerable international interest in its innovative public sector. With a growing population, a ‘clean and green’ image to protect, and rapidly increasing community demand for a wide range of services, its local government sector is responding to the need for improved management.

Business Excellence Award Winner

Christchurch City Council, which has about 2500 employees serving a population of about 365,000 (New Zealand’s second largest city and the biggest on the South Island) is an illustration of public sector excellence. Christchurch’s performance was recognized in September 2006 when the organization was awarded the Performance Excellence Study Award (PESA).

This award is open to organizations from the public and private sectors and recognizes business achievement against international criteria (the US-base  National Quality Award, often known as the Malcolm Baldrige Award.)

There are three categories to the award (health/education, private sector and public sector) with entries being independently audited against the Baldrige quality criteria. Many entries are posted each year by large health, defense, manufacturing and other organizations.

In 2006 only one organization in New Zealand (in any of the categories) was assessed as meeting the strict criteria of the Business Excellence framework – Christchurch City Council.

This city government participated in the awards to gain an external assessment of how the organization is managed. Business Excellence New Zealand (the organizers of the award) spokesman Errol Slyfield says the Christchurch City Council can be justifiably proud of its achievements.

It is unusual for an organization to receive this award in its first year of entry. However the council has earned the accolade. It is a highly competent, mature organization with many strengths, including sophisticated leadership and a clear focus on customer interests.

The development of organization-wide competencies, including advanced analysis, integration and learning and alignment, indicates organizational ability which is sought after by higher performing organizations internationally.”

Organizational improvement is driven by dynamic performance management within the context of long-term goals. For instance, Christchurch City Council uses a version of the Balanced Scorecard alongside the Malcolm Baldrige quality criteria.

City and Council Visions

Long-term goals are distilled into the council’s Vision for Christchurch.

Christchurch will be:

- a place where people enjoy living
- a place of inclusive communities
- a thriving healthy environment
- the most attractive city in New Zealand
- a global economic destination

The vision for the council itself is aligned to this city vision. The organization’s vision of achieving ‘superior results through the talents of our people working together’:

- being customer-driven and community-oriented
- thinking strategically and acting as one organization
- building leadership capability throughout the organization
- being performance-driven and accountable for results
- behaving according to our shared values

‘Horizon’ Balanced Scorecard

Christchurch City Council’s Balanced Scorecard is known as ‘Horizon’. This resonates with the multi-layered performance management horizons and cycles the organization must work to and integrate – see below. It is the council’s business intelligence system, carrying details of performance against strategic and operational plans, plus key financial, process and workforce information. Screen shots are shown in Figures 1, 2 and 3.

An interesting question can be posed: why has Christchurch City Council opted for a modified rather than purely conventional Balanced Scorecard? Performance Manager Peter Ryan provides the answer.

(Ryan is well qualified to do so. While in a similar position with Brisbane City Council, Australia he was instrumental in leading a Balanced Scorecard program that led to that organization achieving the prestigious Balanced Scorecard Collaborative ‘Hall of Fame’ Award. To date only two local authorities in the world have won this award.)

He says:

“There are many strengths of the Balanced Scorecard. For example it links strategy to performance, makes the game plan clear, real and current and is fairly easy to manage when there is a clear outcome, such as profit for commercial organizations.”

“However, it is much tougher to work with when there are multiple, and sometimes competing outcomes, which is typical for local government. This can drive enormous complexity in a poorly conceived Balanced Scorecard program. If not managed, the result can be too many ‘spaghetti and meatballs’ strategy maps, which can become difficult to manage and confuse the organization.”

Horizon is certainly based on the conventional Balanced Scorecard (which Ryan is happy to acknowledge). As Figure 1 shows, it is possible to take a specific service delivery area (in this instance City Environment) and drill down to a specific component (in this case city water and waste/solid waste) and look at the performance of customer, finance, process and people dimensions (thus matching the conventional four scorecard perspectives).

Importantly, Horizon is an intranet-based system through which performance is 100% dynamic and transparent. It can be accessed by anyone in the organization. Ryan argues that such openness helps create a performance-oriented culture as everyone can see how everyone else is performing.

Horizon also focuses squarely on business results. For instance, and keeping with the city water and waste/solid waste example, Figure 2 shows performance from a customer perspective. So we see a level of service, such as ‘wastewater treatment and disposal is available to all properties’, which is supported by a designated owner, target and traffic-light system showing progress to target.

Actual and budgeted year to date performance and current forecasts are also included, bringing a ‘bang for buck’ view to service delivery. Ryan points out that this is a significant shortfall in many scorecard programs. “Seeing service performance under the customer perspective is of limited value if the relevant spend is not visible as well. For example, if delivery of a service is good - but arrived at by cost overruns which cannot be seen on the same screen - is that really a good result? You need to see both to understand value.’’

Most importantly, Horizon also shows the operational tasks that support scorecard targets. This is squarely in line with classic scorecard thinking: it is through clear action programs, not just KPI’s that performance transformation occurs.

important aspect of the Horizon Balanced Scorecard is that when targets are not going to be met (as indicated by a red traffic light), the responsible manager must outline options and a next-step solution, in addition to any explanation of performance variance, as shown in Figure 3.

These options and recommendations form part of the Horizon performance analysis for Executive Team decision making. In this way the organization runs a month to month program to improve its results, not just a strategy monitoring program.

At the strategic level Horizon reporting departs from conventional practice, which is typically based around reporting all scorecard results. Reports to the Executive Team follow a different pattern: a high level one page overview is supplied for each of the four scorecard perspectives, followed by a detailed list of exceptions (results flagged as amber or red, plus the options and recommendations for these, provided by managers). This focuses leadership on the ‘vital few’ pieces of information that must drive decisions.

And the evidence is that Christchurch City Council’s laser-like focus on inculcating exemplary performance management is driving exceptional business results.

As an indication of their successes, annual residents’ surveys show that 70% of Christchurch residents are “very satisfied” with Christchurch as a place to work, live and play, and also with the way the city looks and feels. Customer satisfaction with service at first point of contact is consistently over 95%.

Moreover, in delivering these results the city council has maintained a Standard and Poors AA+ rating. This shows its commitment to return an annual operating surplus each year and manage its level of debt through a clearly defined debt management policy.

Malcolm Baldrige Framework

‘Business Results’ is the seventh and by far the most important set of criteria in the Malcolm Baldrige framework focusing on service, customer and financial results. Working backwards from this point will provide snapshot examples of performance management within the City of Christchurch, and so gain an insight into what the independent assessors saw, as well as an understanding of what drives business results.

Process Management

We start with Criteria Six, Process Management. A primary focus here is managing the organization’s key value creation processes. These are the high level processes that are essential to delivery of council’s primary strategic document – its Long Term Council Community Plan (LTCCP – see below).

Key value processes are determined by the Executive Team and Business Excellence Team (comprising 45 people who lead improvement plans under the seven Baldrige categories).

Human Resources

As an example for Criteria Five (Human Resources), in 2005 the council introduced a new methodology to measure staff engagement and satisfaction. This looks at environment, health and safety, customer focus and communications. HR General Manager Philippa Jones says: “As with many organizations looking for high performance we recognize that staff satisfaction, however important, is not enough. We must go beyond that and ensure our staff are fully engaged with our strategic direction. We see a direct correlation between staff engagement and our business results.”

Measurement, Analysis and Knowledge Management

The Horizon Balanced Scorecard is a powerful example of Christchurch City Council’s delivery to Baldrige Criteria Four (Measurement, Analysis and Knowledge Management).

The Horizon system carries targets, accountabilities, deadlines and monthly performance tracking for all levels of service and projects across the organization, along with their costs. It also carries monthly performance tracking of the key tasks required for delivery of these – some 2000 operational tasks in all. All information is transparent and results are regularly reported to elected members and the community.

Some 250 employees – one in ten staff members – have direct responsibilities in updating and disseminating Horizon results in their team.

In doing so the system manages to combine the key features of an executive information system, along with project management, value analysis and clear line of sight from strategy to operational tasks.

Customer and Market Focus

As an example of Criteria Three, Customer and Market Focus, this council has developed a new approach to resident survey methodology in

conjunction with international market research company, AC Nielsen.

Part 1 regularly tests resident satisfaction across the full range of services, probing into the root cause of very high or very low satisfaction responses. Part 2 asks residents to move resources between services (using a computer generated model) as a means of testing their priorities and understanding the tradeoffs involved.

The quest for improvement continues. Manager Customer Services, David Dally says “Better customer segmentation and improved ways of dealing with service recovery are our key focus areas for the next two years”.

Strategic Planning

Christchurch City Council has a robust strategic planning process, Criteria Two of the Baldrige framework.

Given the requirements of managing an expanding city, Christchurch City Council works to a variety of planning cycles or horizons, as shown in Figure 4.

Figure 4: Christchurch City Council’s Planning Horizons

The strategy development and deployment process ensures close alignment between short term operational plans with longer-term strategic objectives and outcomes for the city.

The Long Term Council Community Plan, the Council’s primary planning document and basis for the Horizon BSC system, contains detailed performance targets for all services to 2016.

Leadership

Criteria One of the Baldrige framework is Leadership. It is of course the quality of leadership that transforms any performance management framework from a nice idea into a practical solution that delivers change.

Christchurch Chief Executive Officer Lesley McTurk says: “Many CEOs and other senior leaders say they want to see transformation take place, but it is a question of finding the discipline and courage to make this happen. For instance, they must reward good performance and investigate poor results every time so that the organization understands the required and expected behaviors. That’s a big commitment. And if you’re aiming to create a dynamic performance culture you must allow 100% access to performance information.”

Conclusion

To conclude, Peter Ryan provides these critical success factors for using performance management frameworks such as the Balanced Scorecard and for creating a performance culture.

•  Keep a clear line of sight from vision and strategy to everyday tasks

•  Think of strategy, resources and performance as one indivisible discipline

•  Deploy then fix - the worst enemy of a good rollout is the dream of a perfect one, so launch at 80% right

•  Transformational leaders must be courageous, resilient and persistent

•  Neither finance nor performance information is worth much alone. The value proposition lies in seeing them together – the bang for your buck.