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Managed Competition: Part of a Successful City’s Strategy

Managed Competition: Part of a Successful City’s Strategy. Teresa Curlin City of Charlotte May 2007. City of Charlotte. Population: 664,232 Council/Manager Government 14 Key Business Units 6,300 employees $1billion plus budget Second largest financial center in U.S. Context for Strategy.

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Managed Competition: Part of a Successful City’s Strategy

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  1. Managed Competition:Part of a Successful City’s Strategy Teresa Curlin City of Charlotte May 2007

  2. City of Charlotte • Population: 664,232 • Council/Manager Government • 14 Key Business Units 6,300 employees • $1billion plus budget • Second largest financial center in U.S.

  3. Context for Strategy Annual Council Strategy Retreat Vision City’s vision statement Priorities and Focus Areas Council communicates themes to Leadership Council Committees/ Focus Area Cabinets 16 Corporate Objectives Corporate Scorecard Response becomes strategic objectives Key Business Unit (KBU) Scorecards Organization Organization implements

  4. City Council Focus Areas Community Safety Housing & Neighborhood Development Transportation Economic Development Environment

  5. City Strategy Community of Choice for Living, Working, and Leisure Vision City Council Focus Areas Strategic Themes Strategic Principle Comprehensive Citizen Service Corporate Scorecard Serve the Customer Reduce Crime Strengthen Neighborhoods Increase Perception of Safety Provide Transportation Choices Safeguard the Environment Promote Economic Opportunity Develop Collaborative Solutions Enhance Customer Service Run the Business Optimize Business Processes Manage Resources Maintain AAA Bond Rating Deliver Competitive Services Expand Tax Base & Revenues Invest in Infrastructure Promote Learning & Growth Achieve Positive Employee Climate Recruit & Retain Skilled, Diverse Workforce Develop Employees

  6. Linking Employees to City Strategy Council Strategy Focus Area: Restructuring Government Corporate Balanced Scorecard Enhance Customer Service KBU Balanced Scorecard Maximize Fleet Availability Division Balanced Scorecard Establish Fleet Availability Rate Employee Performance Plan Maintain 90% Fleet Availability Development Plan Increase skill or knowledge; get certification

  7. City / County Consolidation • First Responder • E-911 • Landfills • Veterans Services • Elections Office • Tax Listings • Tax Collections • Parks & Recreation • Building standards • Planning • Purchasing • Utilities • Animal Control • Emergency Mgt • Crime Lab • Action Line • Charlotte-Mecklenburg Police

  8. Mayor’s Task Force Mayor Richard Vinroot felt that more needed to be done to streamline City costs for services. In 1993 the City established three (3) citizen task forces. • Organization Task Force • Privatization Task Force • Compensation Task Force

  9. Current Key Business Units (KBU) Result Of The Organizational Task Force • Support KBU • Budget & Evaluation • Business Support Services • Finance • Human Resources Service KBU • Aviation • Engineering & Property Management • Fire • Neighborhood Development • Planning • Police • Solid Waste • Transit • Transportation • Utilities

  10. Privatization and Competition Advisory CommitteeResult Of The Privatization Task Force • 11 member PCAC committee • 8 members appointed by City Council, 3 members appointed by the Mayor • Committee Chairman selected by the Mayor from the body of the committee • Each member can serve two possible terms of two years each • Each year a five-year competition plan is presented to the committee

  11. $ Saving Options • Competition: private sector and City staff submit bids to provide service to citizens, so that City may select the most cost effective solution • Optimization: City’s efforts to extend lessons learned in competition to similar operating units • Privatization: service contracted to private sector; employees do not compete Source: Douglas Bean, City of Charlotte Utilities Key Business Executive

  12. How Do We Choose What To Compete or Privatize • Outcomes must be measurable • Annual expenditures should be in excess of $500,000 • Private firms must be interested in performing the services • The “risk of privatization” must be acceptable • Risk of Default • Loss of Human capital • Loss of Control

  13. The Proper Support • Internal Audit: • reviews City proposals • reviews private company financials • audits City contracts for possible gain sharing • Legal: • consultation and review of solicitations and contracts • Procurement: • supports KBUs in solicitation development and contracts negotiation

  14. How We Measure Success • Continuing competition • Savings from competitive solicitations • Savings from on-going contracts resulting in productivity gains and gainsharing • Change in the corporate culture

  15. Program Accomplishments • Competition: • 49 won / 10 lost • Annual savings of $6m • Optimization: • 26 services optimized/reengineered • Annual savings of $4.5m • Privatization: • 72 services outsourced • Annual savings of $3.1m Source: Douglas Bean, City of Charlotte Utilities Key Business Executive

  16. The Link:Employees and Competition • Skilled employees can identify opportunities for operational improvement • Employee commitment makes competition execution successful • Employees are the ones that “operationalize” improvements • Employees commit to a program that recognizes their efforts – gainsharing

  17. Employee Gainsharing • Employee incentive for exceeding performance and budget targets • Savings shared between bidding unit and individual employees • Half to unit / half to employees Source: Douglas Bean, City of Charlotte Utilities Key Business Executive

  18. What About HR? • Cost of HR KBU factored into bids • Bidding unit’s portion of cost of centralized HR function included in bid Do you want to be the reason an operating department loses a bid?

  19. Pay Raises Health insurance Incentive pay Workers’ comp Longevity Social Security tax Medicare Overtime 401(k) Retirement Temporary pay Included Employee Costs

  20. Lessons Learned • Take the time to develop expectations and communicate clearly with the vendors • Construct a meaningful contract with consequences if the vendor does not perform to specific and measurable outcomes • Not every service is suitable for competition • Communicate with employees • Follow through with contract monitoring and open communication with the vendor • Staffing infrastructure is critical to success

  21. More Info • Meeting the Changing Demands of Your Community with Competitive Services…Human Resource’s Vital Role presentation • http://www.charmeck.org/Departments/Human+Resources+City/Human+Resources.htm • City of Charlotte’s Managed Competition Program • http://www.charmeck.org/Departments/Business+Support+Services/Procurement/PCAC/PCAC+Main+Page.htm

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