Risk management and human resources in local government
By Brian Jackson, Director – Consulting and Technical Advisory Services, Peak Services
The impact of increased funding on local government
Higher levels of available funding have significant downstream impacts on local governments, as stress builds on management frameworks and human resources. Those well-oiled (and not so well-oiled) systems, processes, procedures and practices - the essence of an organisation - might not be able to cover increased workloads and identify, nor respond to changes to risk profiles.
With insufficient horsepower, things start to stall. Small ripples can make for big waves and we could add the potential impact of natural disaster events in this same period; say a one in fifty-year storm?
If Council were to have an incident or disruption that prevents the delivery of essential services or programs to the community, this could result in a number of legal liabilities and financial risks, not to mention reputational damage, public or staff safety issues and the potential loss of community confidence.
“The LGAQ has seen first-hand both the opportunities and challenges that come with windfall funding. Those councils that best manage such circumstances are the ones that recognise early on that it is no longer business-as-usual. Whilst the natural reaction internally can often be ’we got this’, it’s folly to suggest that existing business systems, processes and human resources are always going to be able to flex quickly or to the scale or scope needed. In a similar vein, the level of oversight at management at an elected member level should be commensurate with the size of the works program. Doubling the capital works volume of last year? Prudent to also ramp up the corporate reporting and oversight.” Glen Beckett, General Manager Assist, LGAQ.
Adopting a risk management approach to better serve your communities
It is vital to ensure your existing systems, processes, procedures and practices are integrated into a discipline of risk management in a truly structured and integrated way. This needs to involve everyone in the organisation along with those outside, delivering goods and services to the organisation.
A balanced approach is necessary in all areas – from strategic planning to actual operations – with a goal of achieving the highest level of service possible to the community, within acceptable levels of risk and with human resource support within budgets allocated.
Examples of enterprise-wide risks for councils to consider include:
- Operational risk (defective asset or service level increasing liability)
- Regulatory risk
- Financial and sustainability risk
- Environmental risk
- Health and safety risk.
These emerging and evolving risks often come with larger consequences, and short-term decision-making can result in impacts that will be realised only over a long period of time.
Why are risk management and resourcing gaps important for local government?
Adopting an enterprise-wide risk management approach ensures that everyone in the organisation takes risk management seriously. It imposes structure, discipline, process and a level of conformity to ensure risk is approached systematically and continually reviewed.
Risk management must be directly related to an organisation's business and strategy. Your human capital is key, and will help give you the bandwidth to focus on risk management and allow your people to identify, forecast, document, plan and manage risks. Procuring goods and services with requirements that are linked to enterprise risk management should be considered.
The currently increased funding levels will heighten organisational risk. It is prudent for local government to review organisational risk in the context of a risk management framework that is linked to the human resources that are available for the scale of the work ahead. Ensuring human resources are secured early, either by direct employment or outsourced support, should be part of the current forecast and budget processes.
An example of a council’s changed risk profile as a result of the greater funding for projects and renewals is the increased financial risk of managing the long-term, ongoing maintenance of those new or changed assets. Does the council have adequate funds to support this into the future, to ensure it is – or remains – financially fit?
Flinders Shire Council are a great example of a small remote council considered financially fit and their approach towards financial management and consideration of new and future projects. CEO Daryl Buckingham takes a commercial approach to all projects and before any work is done, he ensures a commercial lens is placed over the operational cost of the project in line with a ten-year financial operational plan. Daryl states
“The number one issue small councils, you could say all councils, face is financial sustainability and ongoing operational expenses and lack of a sinking fund. In my opinion these are two of the main reason’s councils fail the fit for future test. I am often surprised by the lack of analysis of ongoing operational expenses. It seems to be a typical local government oversight and it is ongoing. Often when a project is proposed, in the rush to get council approval, the capex is often understated, and the ongoing operational expenses are often forgotten, or overlooked by council officers. At best I suspect this is generally a result of political pressure, limited commercial acumen and inadequate diligence and briefing in terms of deliverables. At worst it’s a cavalier attitude and some future council's problem.
A human resource drain currently exists in Queensland – and you would do well to mobilise now to guard against its impact and the prospect of increased risk. When enterprise-wide risk management is in place, you can leverage human resources to delivery increased workloads that will mitigate increased risks. Don’t get caught out by risk creep on a strained system!
How to fill important resourcing gaps for local government?
Peak Services understands local government and the organisational risks that are inherent in this sector. We have human resources that can support your council to focus sufficiently on and manage enterprise-wide risk and ensure you are best placed to deliver what you said you will deliver.
For support to enable you to operate more strategically to mitigate risks and deliver for your communities, Peak can assist with:
- Recruitment Services: Finding talented professionals for key interim, short and long-term placements.
- Grant Program Office Service: Grant Writing Service and Grant Program Management Service
- Project Management: Project Management Service and Retainer Operational and Capital Works Project Management Support Service
- Asset Management: Asset Management Planning, Maturity and Improvement Planning, Data Analysis, Service Level Reviews
Please contact our Consulting and Technical Advisory Services Team to discuss how we can economically leverage our staff to assist you to focus on serving your communities. Our human resources and services can be secured as a branch of your council to assist manage peak workload providing additional horsepower ‘on tap’.