Part 6: The Five-year Advertising Requirement
The Impact of the Requirement
6.1
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.
6.2
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.
6.3
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
6.4
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.
6.5
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.
6.6
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.
6.7
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.
6.8
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.
6.9
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.
6.10
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.
6.11
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.
6.12
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
6.13
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.
6.14
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.
6.15
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.
6.16
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
6.17
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.
6.18
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.
6.19
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.
6.20
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.
6.21
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.