Part 6: The Five-year Advertising Requirement

Managing the Relationship Between a Local Authority's Elected Members and its Chief Executive.

The Impact of the Requirement

We asked elected members and chief executives for their views on the impact of the five-year advertising requirement on the relationship between council and chief executive. We also asked chief executives whether the requirement had influenced their perception of job security with the local authority or their future career path.

Over 40% of elected members thought that the five-year advertising requirement had had an impact on the council's relationship with its chief executive. About half of the respondents did not think that the requirement had had an impact.

Chief executives were less likely than elected members to think that the advertising requirement had affected their relationship. Almost 60% of chief executives said they did not think there had been an impact, while just under 30% took the opposite view.

The Views of Elected Members and Chief Executives

We received a number of comments about such impacts from both elected members and chief executives. Analysis of those comments revealed a number of common issues:

  • to meet the five-year advertising requirement, a council must incur significant advertising and recruitment costs – even where its preference may be to reappoint the incumbent;
  • advertising the chief executive’s position can create uncertainty for the rest of the local authority’s staff, as well as distrust between the council and the chief executive;
  • uncertainty about the outcome may induce a chief executive to consider other employment options as the end of the five-year term approaches, to avoid the loss of personal reputation that might result from not being reappointed;
  • the requirement has led to the loss of senior management expertise from the local government sector;
  • the incumbent chief executive may be deterred from giving the council free and frank advice for fear of jeopardising their prospects of being reappointed; and
  • the chief executive’s dedication, loyalty, and commitment may suffer.

These are some of the comments made by elected members:

  • Notification is an irresponsible and expensive way of enabling councillors not to take seriously their roles as responsible employers. If the Chief Executive is not performing they should be dealt with at the time rather than when a 5-year term falls due.
  • Makes positive change of Chief Executive possible without incurring excessive costs.
  • Apprehension that good Chief Executives will be lured to other authorities/organisations in the 4th year.
  • It is a key to maintaining performance and accountability for elected councils.
  • Councils should have the right to extend [the] Chief Executive's contract after 5 years. Compulsory advertising is a cost that the ratepayer does not need.
  • Recent exodus of highly qualified Chief Executives around the country has done nothing for the stability of local government in this area.
  • Creates uncertainty in relationship particularly if [the] Chief Executive is performing to an acceptable standard.
  • … now becoming a training ground or step up the corporate ladder for executives. Dedication and commitment quite possibly have become casualties of [the] process.

We received a range of views from chief executives – many of which focused on the disruption created by the requirement and the associated costs, and on their willingness to offer free and frank advice as the end of the five-year term approached. A positive view was that the requirement made the chief executive more accountable to the council.

The following comments illustrate the range of views expressed by chief executives:

  • By politicisation of the CE role there is a reduction in the quality of advice, its independence and the nature of the relationship.
  • CEOs more political, rather than managing. High turnover of CEOs changes organisation’ s stability & forward direction. Corporate knowledge is lost.
  • Always looking behind you rather than ‘ pushing the envelope’ .
  • Almost total exposure to whims and prejudices. Allows performance issues to be avoided and dealt with unfairly and without integrity.
  • Creates political CE who focuses on short term and in last year on reappointment.
  • Lack of certainty in career planning for Ces, adding to staff retention problems in small rural authorities.
  • Focuses the mind on the job. Raises awareness of need to maintain good relationships and performance with the elected members.
  • I need to perform. I am concerned that my independent unbiased advice may get me into trouble and may be viewed as unhelpful. Less inclined to be loyal.

The five-year advertising requirement also had an impact on the willingness of incumbents to reapply for their positions. Both recently appointed and longer-serving chief executives stated that they did not intend reapplying for their positions under the requirement.

Younger chief executives were concerned about disruption for their families. Longer-serving chief executives – some of whom said that they might want to remain in the position, but for less than another five years – felt their council could not justify incurring the expense of recruitment for less than a full five-year term.

The five-year advertising requirement may also have had an impact on tenure. We carried out our survey two years after release of the Solicitor-General’s opinion. Over that two-year period, a significant number of chief executives had been replaced.

Those chief executives recruited or reappointed over that period were aware of the five-year advertising requirement, but were willing to adjust their career expectations. Some chief executives said that they were not planning to remain with their local authority (or even in local government) for longer than five years. The following comments illustrate this attitude:

  • I like it. Opens up options for career growth. Only people to be worried are those who are not good at their job.
  • Looking to move overseas or changing career before contract renewal.
  • Will not risk reapplying when contract expires. Don't want to hit the job market… as a failed CE.
  • I feel insecure. Probably become a nomad, always supposing I can find a council.
  • I am not looking to stay here forever.
  • No point in working till I'm very tired just to get removed after 5 years.
  • Wouldn't now risk becoming a CE from 2nd-tier LG position.
  • I am young … and I am simply not prepared to have to apply for my own job every five years for the rest of my career.

As noted earlier, many chief executives told us that the advertising requirement had not affected their relationship with the council. However, the comments quoted above suggest that the requirement is having an effect on the way in which chief executives view their jobs, their perceptions of job security, and their future career intentions.

Our Views

Impact of the Five-year Advertising Requirement

Some turnover is inevitable, and can bring new expertise into the sector. But over half of all local authorities have replaced their chief executive since the 1998 local elections, with only a handful of those taking up chief executive positions elsewhere in local government. This level of turnover can lead to a serious depletion in the pool of skills and experience at the most senior level of administration in the local government sector.

Two years ago we estimated the average cost of advertising and recruitment at between $25,000 and $30,000.9 The cost of all 86 local authorities going through this process every five years is significant – totalling between $2.2 million and $2.6 million for local government as a whole over a five-year period.

We expect that a council would want the chief executive to hold office for at least five years. But we have concluded from the responses to our survey that the five-year advertising requirement is contributing to a trend for chief executives to hold office for less than five years.

In our view, there may be room for allowing flexibility to cater for other (genuinely desirable) circumstances. The Local Government Bill as introduced into Parliament continues the five-year requirement unchanged. At the time of writing, the Bill is still under consideration by the Local Government and Environment Select Committee.

Compliance with the Requirement

All councils should ensure that their advertising and recruitment for the chief executive’s position comply with the letter and intent of the statutory requirement.

Before the end of the incumbent chief executive’s term the council should advertise the position widely so as to reach as many suitable candidates as possible. The council should assess all applicants in an open and fair manner.

We have noted instances where the council failed to demonstrate its commitment to an advertising and recruitment consistent with the legislation. Two examples are:

  • With the clear intention of reappointing the incumbent, the council advertised the chief executive position on a very limited basis, thereby restricting opportunities for outsiders to apply for the position and, in effect, pre-empting the outcome of the recruitment process.
  • The council made it clear to potential applicants that their application would not be considered.

Near the end of a five-year term, the council should engage in a genuine process of seeking expressions of interest in the position and of assessing applications. The position should be advertised widely and applications sought – in accordance with practice for the recruitment of local authority chief executives, senior management positions in local government, and executive management positions in central government and the private sector.

The council should give all applicants the opportunity to be considered for the position, avoiding any suggestion of pre-determining the outcome of the recruitment process, and ensuring that it can justify its choice. The council should exclude from consideration only those applicants who clearly lack the competencies to meet the requirements of the position.

9: Second Report for 2000, parliamentary paper B.29[00b], page 34.