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.

Shared Services: You Can’t Have Your Cake and Eat It Too

By Dimitri Pojidaeff, HR Group Management Consultants

Originally published in the August 2004 issue of Municipal World

There is an ever growing pressure on municipalities of all sizes to look at sharing services to one degree or another. Such sharing ranges from a simple agreement to share a particular service such as public works, to regional service agreements, to full scale amalgamation of two or more municipalities.

This trend is not surprising as it is driven by the ever increasing need to find the funds required to meet increased demands for services, increased costs of operations in general, costs of repairing and/or replacing aging infrastructure and increased costs due to the increasing requirements, complexity and standards in such areas, for example, as water treatment. The demands on municipalities are enormous. The general public, on the other hand, is already complaining about the high degree of taxation in this country and wants to pay less, not more. The federal government as well as the provincial governments are being repeatedly asked for additional funding. The burden of bearing the costs involved still rests on the shoulders of the individual taxpayer; and they’ve had enough. This is why many of the services and benefits that we take for granted and which we believe we have a right to are being reexamined. This is why all government services at every level will continue to face ever increasing pressure to become as cost effective as possible. This is why there is such an interest in shared services.

Shared services are the most obvious means of obtaining greater cost effectiveness in municipal services; by avoiding duplication of existing services and by making better and more efficient use of all resources, both human and capital. The Alberta Government is even encouraging such sharing by offering Regional Exploration grants of up to $75,000 for municipalities that wish to explore potential regional partnerships.

The major resistance to shared services comes not to any great extent from the taxpayer, but primarily from the politician. The taxpayer wants to ensure that they have enough local representation to obtain good service for the best value; it is the politician who is more likely to talk about such things as preserving local autonomy, the need to preserve the municipality’s individuality and values and the right to self determination at all costs.

We were recently involved in the establishment of a regional fire services agreement between a county, a town and two villages. The county had no fire department of their own and had various agreements with the other three municipalities. The county’s relationship with the town was strained to the point where a county representative said at a public meeting that they were prepared to establish their own fire department. Two taxpayers from the county that were present at the meeting stood up and declared that they were not prepared to pay the costs of having their own county fire department and that the county should cooperate more fully with the town. This type of taxpayer involvement is only going to increase in the same manner that shareholder involvement is greatly increasing in the private sector.

Sharing services, by definition, necessitates loss of some local autonomy and individual decision making. You only have to look at the definitions of the terms involved:

  • Share: “to have, get or use in common with another or others”
  • Autonomous: “responding, reacting or developing independently of the whole”
  • Independent: “not affiliated with a larger controlling unit”, “not requiring or relying on something else”

You cannot successfully gain the benefit of shared services without giving up some local autonomy. This does not mean that one municipality has to give up all control; what it does mean is that the control now has to be shared in some fashion with other municipalities.

Some shared service agreements are set up at arms length from the participants by legally establishing another body such as a commission, a non-profit society or a company under the companies act, for example. You would think that such an arms length, independent body would function well without the usual bickering about local needs and values and costs. This is not necessarily the case.

We were recently asked to provide a workshop for a regional services commission that represents seven municipalities. One municipality was threatening to withdraw, others were complaining about the costs of the service being shared and it was felt by both the Chairperson and the Executive Director that the commission members were still concerned more with their own local viewpoint rather than looking at things from a regional perspective for the benefit of all. The problem with such arrangements is that they are viewed as a way to end such bickering, but they are not as individual members are still free to opt out. Either the will to cooperate and think regionally is there or it is not.

That’s not to say that commissions and other such sharing mechanisms are not an effective means of sharing services. Quite the opposite, they provide a very useful starting point, but they are not a means to ensure that the bickering ends or to force the required cooperative regional  outlook. This will not occur if some or all members are still thinking in terms of local autonomy and independence. Such cooperation cannot be forced by any means. It is only through a new single regional governance model that you can have such cooperation without the ability to opt out. Yet even this ultimate model of shared services will not occur in the first place if it has to be forced. The will to forego some local autonomy must be there for any mechanism or model to work. 

Some municipalities, through a variety of shared service agreements, are showing the foresight and the will to make the necessary sacrifices for the greater overall good of their region and the mutual benefit of all concerned. The politicians involved are showing their accountability to the taxpayer by providing services in the most cost effective manner, even though it necessitates the loss of some local autonomy and independence.

There are also, however, examples of municipalities that talk about regional shared services and possible regional service delivery and governance models, on the one hand, yet on the other hand, they clearly state that they are not prepared to give up their own local governance structures or any of their own local autonomy. You cannot have one without the other.

Shared services are inevitable. If the will to cooperate is not there now, it will be driven by pressures of escalating costs on the one hand and the resistance of the taxpayer on the other hand. Talk of local autonomy and values has a nice ring to it, but you can’t have your cake and eat it too.