HR Group, founded in Edmonton Alberta in 1993, is a partnership of highly experienced management consultants who specialize in organizational effectiveness and human resource management, and promote participative, lean, and cost-effective management practices. All partners are Certified Human Resource Practitioners with extensive senior level experience in both the private and public sectors.

Scarce Resources = Shared Services

By Dimitri Pojidaeff, HR Group Management Consultants

Originally published in the April 2006 issue of Municipal World

In a previous article entitled, “Shared Services are Inevitable”, published five years ago in the October 2000 issue, we stated that “Municipalities are subject to the same pressures as the private sector as they also have a bottom line – not profit and loss, but tax rate. The public’s loyalty today, in both the private and the public sector, is to the provider of quality service and/or product at the best possible price. Nothing else really matters.”

Since that time we have seen the move to greater sharing increase dramatically. The primary reason for this rapid increase has been not only the bottom line, but also the escalating scarcity of manpower resources at all levels, which, of course, has an impact on the bottom line. Chief administrative officers are retiring at an alarming rate and qualified, experienced candidates are in short supply to replace them. Young graduates and interns who have their Local Government Certificate or other training expect, unfortunately, to become chief administrative officers overnight. Being a chief administrative officer, however, requires expertise in organizational effectiveness and development, leadership skills, and the ability to direct and manage the performance of others,  which only comes with maturity, and a fair amount of varied experience.

Public works superintendents are virtually unobtainable and are not, to our knowledge, being trained. The days of being able to promote the capable and well experienced foreman, who has the street smarts, but not the computer, financial, and managerial skills are long gone. A public works superintendent today must be able to provide five year financial forecasts, to understand the growing technical and operating requirements imposed by legislation, and to manage a large and diverse workforce. Over a year was spent trying to find a qualified public works superintendent for one municipality. They finally contracted the services of a local professional engineer who had been providing consulting services to them.

This scarcity of qualified manpower is also found in specialized technical areas such as water and wastewater treatment. Technical requirements in this field have increased substantially to the point where Level 1 and Level 2 certificates are no longer adequate in many cases as there is now a Level 3 and a recent Level 4. After Walkerton, every municipality across the country realized that they could not afford to ignore the requirements in this area and the requirements have become far more stringent.

This overall scarcity also leads to the inevitable laws of supply and demand. If you can find  qualified applicants you are going to have to pay substantially more for them than you did for the people that they are replacing. We have repeatedly seen smaller municipalities face the shock of having to pay upwards of $10,000 more per annum for a new chief administrative officer. Qualified water and wastewater technicians can demand and get enormous increases in pay. Good candidates know that they have considerable leverage and bargaining power in determining their overall conditions of employment. Isolated northern communities have always had to pay well to attract and retain competent staff; they now have to virtually bribe qualified staff and lure them away from other municipal employers. This growing competition is not purely a phenomenon of a province like Alberta with a general shortage of labour brought on by the economic boom of the oilsands. Municipalities from all across Canada are competing with each other to fill their vacancies. In response to a recent advertisement on the Municipal World website for a chief administrative officer in Alberta, our firm had over 50 applications with over 40 from outside the Province and from as far away as Nova Scotia and the United States.

This shortage of qualified staff places enormous pressure on all municipalities, but especially the smaller ones that have fewer resources in general and the more remote ones that have always had difficulties in recruiting. Villages, many of which are not economically viable anymore in the first place, simply cannot afford to hire the expertise that they are required by legislation to have. They are forced to rely on sharing such expertise as water and wastewater treatment with other urban or rural municipalities. Many villages are paying their administrators far below the going rate as administrators sacrifice their salary for the “sake of the community” in which they live. Many cannot afford to provide their administrators with basic benefits. The next administrator, if a qualified one can be found in the first place, is not likely to make the same sacrifice. And why should they realistically be expected to sacrifice what their counterparts in larger, more viable communities have as a matter of course? Many such municipalities are now asking a larger urban neighbor or the surrounding County or District to administer all their services. Many others, unfortunately, are quickly being driven to dissolution and the loss of their individual autonomy.

The larger and more viable communities are better able to pay the higher salaries, yet they are also being forced to look at shared services, purely because they may not be able to otherwise find the required staff and the required expertise.

The more remote communities have always had to look at more flexible staffing options; they now have to try even harder and are more and more being forced to rely on shared service arrangements with each other to make maximum use of scarce staff resources.

Scarce resources are forcing municipalities to cooperate with each other and to forego some of the traditional mindsets that have led, in so many instances, to a lack of cooperation and an almost insular attitude on the part of many municipalities. We see today an ever increasing number of municipal partnerships in so many different areas. Regional approaches to emergency services are becoming the norm as standards increase and there is a need for more qualified personnel and greater levels of service. Regional approaches to economic development are rapidly increasing as groups of municipalities realize that their respective interests are so thoroughly intertwined. Rural and urban municipalities are sharing the costs of recreational services, where for ages the rural municipalities refused to contribute anything towards the recreational facilities of the urban centres. Larger municipalities are offering their services and expertise to smaller communities on a contract basis. Some municipalities are quietly exploring the possibilities of amalgamation and regional governance.

Scarce resources in general are driving the move to shared services – a change that is of benefit to all concerned.