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.

Share First, Amalgamate Later

By Dimitri Pojidaeff, HR Group Management Consultants

Originally published in the June 2002 issue of Municipal World

We frequently hear talk, today, of merger, amalgamation and regionalization in the municipal sector and all too often this only raises the emotions of both politicians and taxpayers who talk about the sanctity of local governance, the necessity of maintaining control over local services and the fight against the intrusion of others into their own local affairs. Valid opportunities for cost effective sharing of services are, as a result, unfortunately lost. The parties involved are more concerned about perceived issues of power and governance than they are about unnecessary duplication of resources and services. This is not surprising; discussing political amalgamation before any determination of actual cost benefit to the parties involved is putting the cart before the horse.

What must first occur is a full cost/benefit analysis of what can be saved and/or gained. If there is no cost savings and/or no gain in service to any of the parties involved, then why amalgamate anyway? The only savings then, potentially, would be in the remuneration and expense of some elected representatives assuming that their number would be reduced. This is hardly sufficient reason to amalgamate given the small costs involved as a percentage of total budget.

Why spend so much time, money and energy analyzing tax rates, assessment bases and potential governance models when the cost benefits have not yet been fully determined and demonstrated to all parties? This is bound to only heighten everyone’s fears and emotions.

The prime component of any merger or amalgamation is the melding of two or more organizational structures and all the staff and capital assets involved. It is, in effect, the sharing of all services, not the tax rate or the governance structure. What needs to be determined first, therefore, is can the services be merged, how is it going to be done, what effect will this have on staff, organizational structure, equipment, buildings and other assets? Will there be any savings? What will be the effect on customer service? Can all parties maintain the desired level of service?

To gain the taxpayers attention and approval, it must be shown that they will benefit through any sharing of services either through increased service and/or less current or future taxes. If there are benefits that can be shown to all taxpayers, if it can be shown that this is a win-win situation that represents everyone’s interests, then there is a firm base to at least support the option of sharing services. In fact it is more than an option, as the taxpayers will sooner or later, probably sooner, insist that services be shared to alleviate their current and/or potential tax rates.

The taxpayer today, like any consumer, has no loyalty other than to whomever can provide the best quality at the lowest price. Tell them that they have to pay more to maintain or even increase the level of service and their loyalty and resistance to change is gone in an instant if it can be shown that some other method of providing service is more cost effective.

The first logical step in this process is to review the current organizational structures and determine their overall effectiveness. Are staff and all resources utilized in the most cost effective manner? What is the level of customer service? What are the current and future needs? Is the organizational structure the most effective? In other words, where are they now and how are they doing?

The next step is to determine and identify their current and future needs and their overall goals and objectives. This can be done through various common planning tools such as a SWOT (strengths, weaknesses, opportunities and threats) analysis and an overall brainstorming session.

The third step is to compare the results obtained in the first two steps and to determine and identify what can be shared in terms of staff, services, equipment, buildings and other assets. What are the benefits that can be obtained in terms of current and/or future savings and service? What are the benefits that can be obtained from a larger staff mix in terms of multi-skilling and cross-training? What, if any, are the overall potential benefits and how can they be achieved?

If the parties concerned agree to proceed, the next step is to determine and resolve the impact on staffing levels. If two areas are being merged such as two public works departments, then the question of leadership between the two existing department heads must be settled first. Only one department head is required. Which one is the best for the new position? Is there another useful position that the other can and wants to fill? Does one of them wish to take an early retirement package or a severance package? All alternatives must be explored and the individuals fairly dealt with if the merged services are to succeed. Such questions of leadership, be they at the top with the Chief Administrative Officers or at any level of the organization, must be settled first in order to prevent potential resistance to the change. It is only human nature, under the circumstances, to protect one’s turf.

Once these leadership issues have been resolved, the new “management team” can be instructed to proceed in merging the services.

In summation, then, a common sense practical process involves the following steps:

  • Review the current organizational structures and their overall effectiveness.
  • Determine current and future needs and goals.
  • Compare results and determine what can/should be shared.
  • Resolve the impact on staffing and especially the leadership roles.
  • Merge the service(s) under unified leadership.

This process is designed to share services first, prove that it works beneficially to all concerned, and allow the appropriate model of governance to develop in time as trust is developed between the parties and on the part of all taxpayers.