Part 7: Specifying Expectations and Reviewing Performance

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

The Performance Review Framework

The employment relationship between a council and its chief executive should be based on an agreed and clearly understood set of expectations about performance. We said in paragraph 5.16 (on page 36) that the full council should agree on:

  • the job description;
  • the key result areas; and
  • the values and behaviours that the chief executive will be expected to display and promote in the organisation.

In paragraph 4.3 (on page 25) we quoted the statutory expectations of the characteristics that the chief executive should be expected to have, and in paragraph 4.4 (on pages 25-26) we quoted some specific statutory responsibilities placed on the chief executive.

The council should articulate these expectations clearly, comprehensively, and in writing in:

  • the employment agreement; and
  • the performance agreement – so as to provide the basis for regular reviews of performance.

The performance agreement should cover all aspects of the chief executive’s role and the council’s priorities, and specify the chief executive's specific responsibilities for:

  • advising the council;
  • undertaking long-term planning;
  • leading the local authority and managing its day-to-day activities;
  • employing staff; and
  • promoting the values of the organisation.

Figure 3 on the next page outlines a suggested process for reviewing the chief executive’s performance.

Figure 3
A Suggested Process for Reviewing the Chief Executive’s Performance

Figure 3.

Reproduced with the permission of Alan Bickers Management Services.

A framework and formal process for regularly reviewing the chief executive’s performance enables concerns to be raised and dealt with before they can have a serious impact on the chief executive’s relationship with the council. The council as a whole should take part in the review.

An agreed performance review framework that draws on objective information about the chief executive’s performance, and a process which involves the council as a whole, will minimise the likelihood of divisions within the council when individual elected members:

  • perceive that other members have a better opportunity to influence the review process;
  • comment on the chief executive’s performance in inappropriate forums, rather than within the formal performance review;
  • disagree with the council’s assessment of the chief executive’s performance;
  • view increases to the chief executive’s remuneration as excessive; or
  • disagree with the decision to pay, or the amount of, any performance-related bonus payment.

The council should consult appropriately and observe its obligations as a good employer. It could compromise the review process if it fails to:

  • seek the views of the chief executive; or
  • seek feedback from other parties who may be in a position to comment on the chief executive's performance.

Compromising the chief executive's performance review could result in the chief executive being:

  • unclear about the council’s priorities and expectations;
  • unwilling or unable to identify and address weaknesses in their performance; and
  • given grounds for raising a personal grievance or other employment dispute.

What We Asked About Reviewing Performance

We asked elected members:

  • for their views on the process used to review the performance of their chief executive;
  • whether their council found the employment agreement, job description, and performance agreement useful tools for reviewing performance;
  • whether the process could be improved; and
  • whether they were adequately informed about the agreement and performance expectations.

We asked elected members and chief executives:

  • about those values and behaviours which should guide the chief executive in performing their duties; and
  • whether, as part of performance review, the council assessed whether the chief executive had displayed the appropriate values and behaviours in carrying out their duties.

We asked chief executives:

  • about their performance review process and whether it worked well;
  • about grievance and termination provisions in their employment agreement; and
  • whether the employment agreement provided an entitlement to compensation if they were not reappointed at the end of their term of appointment.

The Views of Elected Members and Chief Executives

Views on Performance Review

Most elected members were satisfied that the employment agreement, job description, and performance agreement were useful benchmarks for managing their relationship with the chief executive. However, some elected members identified other difficulties:

  • Councillors are not experienced in performance management matters. As Mayor it becomes my job to drive the process and keep minutes etc. It would be far easier for all concerned to hand the whole process over to someone who specialised in that line of work.
  • Takes more than a formal process to have a good management relationship with [the] chief executive.
  • Very difficult to evaluate performance measures, very contentious and debatable process.

Elected members also identified other channels for communicating expectations to their chief executive and giving feedback on performance:

  • Weekly meetings between chief executive and Mayor, while quarterly meetings with Performance Review Sub-Committee.
  • All councillors interviewed, concerns raised, performance ranked.
  • Chief executive reports to each council meeting and whenever necessary. Chief executive happy to answer questions and meet councillors individually.
  • Continuous monitoring of progress of annual plan and chief executive's annual objectives.

Most chief executives said that they were happy with the process. However, they also made a number of observations, of which the following are representative:

  • Councillors need to understand what a performance review is, what they need to do to conduct a review and what they expose themselves to if they don't follow processes they've agreed to.
  • [There is] always a link to pay and bonuses, which influences some councillors’ view of performance.
  • Subjective and open to political whim.

Specifying Performance Measures

We asked chief executives how their performance expectations were specified and measured. Responses included the following comments:

  • Council had no-one to help them do this, they are not experts at it, less scrupulous chief executives could manipulate this.
  • Council assessment will always be largely subjective therefore trying to tie it up with numbers based on audited measures could lead to conflict.
  • Council often wants to measure 'political' success, restricts scope to management which causes tension and mistrust.
  • Councillors prefer to have generalised measures, can only be valued from personal perception rather than actual results. Personalities have an influence.
  • Expectations are largely subjective and not easily measured, will be based on perceptions at the time.
  • Written by myself, 'tweaked' in a minor way by employment committee – might be more helpful for council to employ some advice.

Promoting Appropriate Values and Behaviours

Almost 90% of mayors/chairpersons and 70% of elected members noted that their council assessed whether their chief executive displayed appropriate values and behaviours in carrying out their duties.

We also asked elected members whether the performance agreement (or other accountability documents) specified the values and behaviours which the chief executive was expected to display in their day-to-day work, and promote throughout the local authority. Comments from elected members suggested that, generally, the performance agreement specifies these expectations. The following comments reflect the range of views expressed:

  • At [the] time of recruitment selection this is spelt out, subsequent changes are less clearly signalled.
  • Challenge to get unanimity among councillors.
  • Evolving area, we are on track.
  • This is specifically detailed in [the] chief executive's performance agreement, which we appraise annually.
  • There is agreement between [the] chief executive and council on expectations.
  • Expectations are becoming clearer but feedback from citizens still show shortcomings.
  • Values are not strongly defined, nor are expected behaviours, seem to 'fall out' of the character and style of the person selected as chief executive.
  • [the Council] does – further comment is made during the Annual Review process.
  • Values and behaviour clearly expressed in key result areas and organisational values identified.
  • Believe one of the major advantages of a small district council is the ability to make it easy for CEs and councillors to own the vision, goals and strategies.

We also asked chief executives where the council specified its expectations of their values and behaviours. Almost 40% of chief executives were not able to identify a document in which such expectations were specified.

Grievance Provisions

We asked whether employment agreements contained grievance provisions. Chief executives responded that most agreements specified grounds for dismissal, but in relation to grievances most referred simply to the standard provisions prescribed by the Employment Relations Act 2000.

Most employment agreements did not provide for entitlement to financial compensation for non-reappointment. Where an agreement did contain such a provision, the compensation figure ranged from three months’ to twelve months’ salary.

Our Views

Participation of Elected Members

The council as a whole should agree on:

  • the objectives, targets, and priorities for the chief executive, and the values and behaviours that they are expected to display in their work and promote throughout the local authority;
  • the process for reviewing the chief executive’s performance;
  • the means by which all elected members may express their views on the chief executive’s performance;
  • changes to key result areas and performance targets; and
  • changes to the job description, conditions of employment, or remuneration.

The council and the chief executive should agree on the relationship between performance review and any bonus payments or other incentives. The full council should consider any proposal to change the chief executive's remuneration or pay a performance bonus.

Specifying Expectations of the Chief Executive’s Performance

Setting the expectations of performance for the chief executive requires the council to:

  • specify expected achievements and key result areas;
  • define (in consultation with the chief executive) standards against which performance can be measured;
  • reach agreement with the chief executive on any bonus to be payable should the performance standards be met or exceeded; and
  • identify the values and behaviours to be displayed in their daily work and promoted throughout the local authority.

All respondents noted how difficult it was to develop measures against which to assess the chief executive’s performance in a meaningful and objective way.

Respondents’ comments suggest that councils find it difficult to define the values and behaviour expected of the chief executive. Models of values and behaviours relevant to local government (drawing on work already undertaken in the public sector) would help councils to define their expectations.

Negotiating Performance Expectations with a New Council

Chief executives are likely to have to work for more than one council, and with many different elected members, over the course of their employment with a local authority. A chief executive needs to win the confidence and trust of newly elected members by demonstrating:

  • responsiveness to the strategic objectives of the new council; and
  • commitment to giving effect to its priorities.

Newly elected members too need to be mindful that the chief executive has an established employment relationship with the council – evidenced by at least an employment agreement. If the council wants to make changes in policy direction or emphasis that affect the employment relationship, the changes should be made in a manner that is fair, transparent, and agreed by both parties.

Obtaining Feedback on the Chief Executive’s Performance

Performance reviews should be carried out in a fair and transparent manner. For its part, the council could draw on various sources of information about the chief executive’s performance – including elected members, staff, members of the community, and the council’s business partners.

However, before approaching third parties for information the council should consider any sensitivity in doing so (such as the risk of upsetting a professional or manager/team member working relationship) and, if necessary, take independent advice. An example of where caution should be exercised is when the so-called “360-degree feedback” method of assessing performance is used.10

In obtaining information from third parties, the council should also (in terms of the principle of fairness) do so with the knowledge of the chief executive, who should be given the opportunity to consider and comment on the information. For that reason, the council needs to consider carefully whether it will obtain and use information from sources who want the information treated as confidential.

The Chief Executive Reviewing Their Own Performance

The chief executive may review their own performance, having regard to the circumstances encountered during the review period. This self-review is an essential component of performance review – because it ensures that the chief executive has the opportunity to provide their own perspective, and lends balance to the process. A council should therefore encourage its chief executive to review their own performance.

Using an Adviser or Consultant

A council should consider using an adviser or consultant to help:

  • set objective and comprehensive performance measures;
  • review performance against these measures;
  • review remuneration, including any bonus or other incentive component;
  • gather views on performance; and
  • ensure that the review process is fair and impartial, and has the full confidence of all elected members and the chief executive.


Performance reviews can be carried out in different ways and at different intervals. The employment agreement should specify how often reviews are to take place and in what manner.

The council should tell the chief executive of any concerns it has about their performance. The chief executive should be given the opportunity to respond to any criticisms of their performance and propose remedial action to address concerns.

Ongoing feedback to the chief executive should ensure that performance reviews do not raise concerns or issues of which the chief executive is unaware. The council should raise any performance concerns when they first emerge, because this will make it possible to take remedial action before the concerns become major issues.

The council and the chief executive should keep a signed, written record of every performance review.

Terminating the Chief Executive's Contract

A council considering terminating the chief executive’s employment should:

  • take legal advice on the options available and the risks associated with each option; and
  • ensure that it acts lawfully and fairly throughout the process.

Negotiations over performance matters can sometimes result in a severance agreement, under which the chief executive agrees to resign in return for certain compensation. Severance agreements pose risks for public sector organisations, because of the need for organisations to justify their actions to the public, and the obligation to avoid unnecessary or unreasonable expense.

For a detailed expression of our views on the subject, the reader is referred to our May 2002 report Severance Payments in the Public Sector.11 (updated in 2019)

10: The “360 degree feedback” entails obtaining assessments of the person’s performance from people other than the person’s immediate superior, including the person’s staff.

11: ISBN 0 477 02895 0, also available on our web site

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